Correlation Between Microsoft and Allianzgi Emerging

Can any of the company-specific risk be diversified away by investing in both Microsoft and Allianzgi Emerging 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 Allianzgi Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Microsoft and Allianzgi Emerging Markets, you can compare the effects of market volatilities on Microsoft and Allianzgi Emerging 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 Allianzgi Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Allianzgi Emerging.

Diversification Opportunities for Microsoft and Allianzgi Emerging

-0.08

Correlation Coefficient

Microsoft  Allianzgi Emerging

Good diversification

The 3 months correlation between Microsoft and Allianzgi is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Allianzgi Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Emerging 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 Allianzgi Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi Emerging has no effect on the direction of Microsoft i.e., Microsoft and Allianzgi Emerging go up and down completely randomly.

Pair Corralation between Microsoft and Allianzgi Emerging

Given the investment horizon of 90 days Microsoft is expected to under-perform the Allianzgi Emerging. In addition to that, Microsoft is 1.78 times more volatile than Allianzgi Emerging Markets. It trades about -0.11 of its total potential returns per unit of risk. Allianzgi Emerging Markets is currently generating about 0.01 per unit of volatility. If you would invest  2,782  in Allianzgi Emerging Markets on December 30, 2024 and sell it today you would earn a total of  15.00  from holding Allianzgi Emerging Markets or generate 0.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Microsoft  vs.  Allianzgi Emerging Markets

Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Allianzgi Emerging

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Emerging Markets are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Allianzgi Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Microsoft and Allianzgi Emerging

The main advantage of trading using opposite Microsoft and Allianzgi Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Allianzgi Emerging 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 Allianzgi Emerging will offset losses from the drop in Allianzgi Emerging's long position.

The idea behind Microsoft and Allianzgi Emerging Markets 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.