Correlation Between Microsoft and Marsico Global

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

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

Diversification Opportunities for Microsoft and Marsico Global

0.85

Correlation Coefficient

Microsoft  Marsico Global

Very poor diversification

The 3 months correlation between Microsoft and Marsico is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Marsico Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsico Global 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 Marsico Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marsico Global has no effect on the direction of Microsoft i.e., Microsoft and Marsico Global go up and down completely randomly.

Pair Corralation between Microsoft and Marsico Global

Given the investment horizon of 90 days Microsoft is expected to under-perform the Marsico Global. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.03 times less risky than Marsico Global. The stock trades about -0.34 of its potential returns per unit of risk. The Marsico Global is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest  2,758  in Marsico Global on October 15, 2024 and sell it today you would lose (139.00) from holding Marsico Global or give up 5.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Microsoft  vs.  Marsico Global

Microsoft

Risk-Adjusted Performance

0 of 100

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 comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Marsico Global

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marsico Global are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Marsico Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Microsoft and Marsico Global

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

The idea behind Microsoft and Marsico Global 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 Commodity Directory module to find actively traded commodities issued by global exchanges.