Correlation Between Microsoft and Akamai Technologies,

Can any of the company-specific risk be diversified away by investing in both Microsoft and Akamai Technologies, at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Microsoft and Akamai Technologies, into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Microsoft and Akamai Technologies,, you can compare the effects of market volatilities on Microsoft and Akamai Technologies, and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Microsoft with a short position of Akamai Technologies,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Akamai Technologies,.

Diversification Opportunities for Microsoft and Akamai Technologies,

0.35

Correlation Coefficient

Microsoft  Akamai Technologies,

Weak diversification

The 3 months correlation between Microsoft and Akamai is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Akamai Technologies, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akamai Technologies, and Microsoft is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Microsoft are associated (or correlated) with Akamai Technologies,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akamai Technologies, has no effect on the direction of Microsoft i.e., Microsoft and Akamai Technologies, go up and down completely randomly.

Pair Corralation between Microsoft and Akamai Technologies,

Given the investment horizon of 90 days Microsoft is expected to generate 2.11 times less return on investment than Akamai Technologies,. But when comparing it to its historical volatility, Microsoft is 1.9 times less risky than Akamai Technologies,. It trades about 0.05 of its potential returns per unit of risk. Akamai Technologies, is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,611  in Akamai Technologies, on October 7, 2024 and sell it today you would earn a total of  299.00  from holding Akamai Technologies, or generate 6.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Microsoft  vs.  Akamai Technologies,

Microsoft

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Akamai Technologies,

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Akamai Technologies, are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward-looking signals, Akamai Technologies, may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Microsoft and Akamai Technologies,

The main advantage of trading using opposite Microsoft and Akamai Technologies, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Akamai Technologies, can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Akamai Technologies, will offset losses from the drop in Akamai Technologies,'s long position.

The idea behind Microsoft and Akamai Technologies, pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.