Correlation Between Microsoft and Lsv Global

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

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

Diversification Opportunities for Microsoft and Lsv Global

-0.63

Correlation Coefficient

Microsoft  Lsv Global

Excellent diversification

The 3 months correlation between Microsoft and Lsv is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Lsv Global Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lsv Global Managed 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 Lsv Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lsv Global Managed has no effect on the direction of Microsoft i.e., Microsoft and Lsv Global go up and down completely randomly.

Pair Corralation between Microsoft and Lsv Global

Given the investment horizon of 90 days Microsoft is expected to under-perform the Lsv Global. In addition to that, Microsoft is 2.8 times more volatile than Lsv Global Managed. It trades about -0.08 of its total potential returns per unit of risk. Lsv Global Managed is currently generating about 0.2 per unit of volatility. If you would invest  1,006  in Lsv Global Managed on December 29, 2024 and sell it today you would earn a total of  71.00  from holding Lsv Global Managed or generate 7.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Microsoft  vs.  Lsv Global Managed

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.

Lsv Global Managed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lsv Global Managed are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Lsv Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Microsoft and Lsv Global

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

The idea behind Microsoft and Lsv Global Managed 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.