Correlation Between Microsoft and Graf Global
Can any of the company-specific risk be diversified away by investing in both Microsoft and Graf Global 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 Graf Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Graf Global Corp, you can compare the effects of market volatilities on Microsoft and Graf Global 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 Graf Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Graf Global.
Diversification Opportunities for Microsoft and Graf Global
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Graf is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Graf Global Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graf Global Corp 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 Graf Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graf Global Corp has no effect on the direction of Microsoft i.e., Microsoft and Graf Global go up and down completely randomly.
Pair Corralation between Microsoft and Graf Global
Given the investment horizon of 90 days Microsoft is expected to under-perform the Graf Global. In addition to that, Microsoft is 11.78 times more volatile than Graf Global Corp. It trades about -0.08 of its total potential returns per unit of risk. Graf Global Corp is currently generating about 0.22 per unit of volatility. If you would invest 1,007 in Graf Global Corp on December 28, 2024 and sell it today you would earn a total of 18.00 from holding Graf Global Corp or generate 1.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Microsoft vs. Graf Global Corp
Performance |
Timeline |
Microsoft |
Graf Global Corp |
Microsoft and Graf Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and Graf Global
The main advantage of trading using opposite Microsoft and Graf Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Graf Global 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 Graf Global will offset losses from the drop in Graf Global's long position.Microsoft vs. Palo Alto Networks | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings | Microsoft vs. Zscaler |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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