Correlation Between Microsoft and Global Engine
Can any of the company-specific risk be diversified away by investing in both Microsoft and Global Engine 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 Global Engine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Global Engine Group, you can compare the effects of market volatilities on Microsoft and Global Engine 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 Global Engine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Global Engine.
Diversification Opportunities for Microsoft and Global Engine
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microsoft and Global is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Global Engine Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Engine Group 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 Global Engine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Engine Group has no effect on the direction of Microsoft i.e., Microsoft and Global Engine go up and down completely randomly.
Pair Corralation between Microsoft and Global Engine
Given the investment horizon of 90 days Microsoft is expected to generate 0.17 times more return on investment than Global Engine. However, Microsoft is 5.82 times less risky than Global Engine. It trades about 0.05 of its potential returns per unit of risk. Global Engine Group is currently generating about -0.08 per unit of risk. If you would invest 43,048 in Microsoft on September 16, 2024 and sell it today you would earn a total of 1,679 from holding Microsoft or generate 3.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 93.85% |
Values | Daily Returns |
Microsoft vs. Global Engine Group
Performance |
Timeline |
Microsoft |
Global Engine Group |
Microsoft and Global Engine Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and Global Engine
The main advantage of trading using opposite Microsoft and Global Engine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Global Engine 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 Global Engine will offset losses from the drop in Global Engine's long position.Microsoft vs. Global Blue Group | Microsoft vs. Aurora Mobile | Microsoft vs. Marqeta | Microsoft vs. Nextnav Acquisition Corp |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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