Correlation Between Microsoft and Argen X

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

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

Diversification Opportunities for Microsoft and Argen X

-0.31

Correlation Coefficient

Microsoft  Argen X

Very good diversification

The 3 months correlation between Microsoft and Argen is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Argen X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argen X 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 Argen X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argen X has no effect on the direction of Microsoft i.e., Microsoft and Argen X go up and down completely randomly.

Pair Corralation between Microsoft and Argen X

Given the investment horizon of 90 days Microsoft is expected to under-perform the Argen X. In addition to that, Microsoft is 1.21 times more volatile than Argen X. It trades about -0.06 of its total potential returns per unit of risk. Argen X is currently generating about 0.04 per unit of volatility. If you would invest  58,640  in Argen X on November 29, 2024 and sell it today you would earn a total of  1,400  from holding Argen X or generate 2.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Microsoft  vs.  Argen X

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 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.

Argen X

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Argen X are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Argen X is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Microsoft and Argen X

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

The idea behind Microsoft and Argen X 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.