Correlation Between Microsoft and Delaware Smid

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

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

Diversification Opportunities for Microsoft and Delaware Smid

-0.37

Correlation Coefficient

Microsoft  Delaware Smid

Very good diversification

The 3 months correlation between Microsoft and Delaware is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Delaware Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delaware Smid Cap 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 Delaware Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delaware Smid Cap has no effect on the direction of Microsoft i.e., Microsoft and Delaware Smid go up and down completely randomly.

Pair Corralation between Microsoft and Delaware Smid

If you would invest  44,667  in Microsoft on September 15, 2024 and sell it today you would earn a total of  60.00  from holding Microsoft or generate 0.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	20.63%
Values	Daily Returns

Microsoft  vs.  Delaware Smid Cap

Microsoft

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 4 (%) 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.

Delaware Smid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delaware Smid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Delaware Smid 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 Delaware Smid

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

The idea behind Microsoft and Delaware Smid Cap 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.