Correlation Between Microsoft and Guidestone Funds
Can any of the company-specific risk be diversified away by investing in both Microsoft and Guidestone Funds 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 Guidestone Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Guidestone Funds , you can compare the effects of market volatilities on Microsoft and Guidestone Funds 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 Guidestone Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Guidestone Funds.
Diversification Opportunities for Microsoft and Guidestone Funds
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Guidestone is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Guidestone Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidestone Funds 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 Guidestone Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidestone Funds has no effect on the direction of Microsoft i.e., Microsoft and Guidestone Funds go up and down completely randomly.
Pair Corralation between Microsoft and Guidestone Funds
Given the investment horizon of 90 days Microsoft is expected to under-perform the Guidestone Funds. In addition to that, Microsoft is 4.75 times more volatile than Guidestone Funds . It trades about -0.14 of its total potential returns per unit of risk. Guidestone Funds is currently generating about 0.06 per unit of volatility. If you would invest 965.00 in Guidestone Funds on December 5, 2024 and sell it today you would earn a total of 10.00 from holding Guidestone Funds or generate 1.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Microsoft vs. Guidestone Funds
Performance |
Timeline |
Microsoft |
Guidestone Funds |
Microsoft and Guidestone Funds Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and Guidestone Funds
The main advantage of trading using opposite Microsoft and Guidestone Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Guidestone Funds 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 Guidestone Funds will offset losses from the drop in Guidestone Funds' long position.Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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