Correlation Between Microsoft and Counterpoint Tactical

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

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

Diversification Opportunities for Microsoft and Counterpoint Tactical

0.23

Correlation Coefficient

Microsoft  Counterpoint Tactical

Modest diversification

The 3 months correlation between Microsoft and Counterpoint is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Counterpoint Tactical Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Counterpoint Tactical 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 Counterpoint Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Counterpoint Tactical has no effect on the direction of Microsoft i.e., Microsoft and Counterpoint Tactical go up and down completely randomly.

Pair Corralation between Microsoft and Counterpoint Tactical

Given the investment horizon of 90 days Microsoft is expected to under-perform the Counterpoint Tactical. In addition to that, Microsoft is 1.97 times more volatile than Counterpoint Tactical Equity. It trades about -0.11 of its total potential returns per unit of risk. Counterpoint Tactical Equity is currently generating about 0.07 per unit of volatility. If you would invest  2,031  in Counterpoint Tactical Equity on December 29, 2024 and sell it today you would earn a total of  64.00  from holding Counterpoint Tactical Equity or generate 3.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Microsoft  vs.  Counterpoint Tactical Equity

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.

Counterpoint Tactical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Counterpoint Tactical Equity are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Counterpoint Tactical 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 Counterpoint Tactical

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

The idea behind Microsoft and Counterpoint Tactical Equity 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.