Correlation Between Microsoft and IShares Property

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

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

Diversification Opportunities for Microsoft and IShares Property

0.29

Correlation Coefficient

Microsoft  IShares Property

Modest diversification

The 3 months correlation between Microsoft and IShares is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and iShares Property Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Property Yield 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 IShares Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Property Yield has no effect on the direction of Microsoft i.e., Microsoft and IShares Property go up and down completely randomly.

Pair Corralation between Microsoft and IShares Property

Given the investment horizon of 90 days Microsoft is expected to under-perform the IShares Property. In addition to that, Microsoft is 1.73 times more volatile than iShares Property Yield. It trades about -0.1 of its total potential returns per unit of risk. iShares Property Yield is currently generating about -0.06 per unit of volatility. If you would invest  2,835  in iShares Property Yield on December 25, 2024 and sell it today you would lose (97.00) from holding iShares Property Yield or give up 3.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Microsoft  vs.  iShares Property Yield

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.

iShares Property Yield

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Property Yield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Property is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Microsoft and IShares Property

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

The idea behind Microsoft and iShares Property Yield 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.