Correlation Between Microsoft and Leverage Shares
Can any of the company-specific risk be diversified away by investing in both Microsoft and Leverage Shares 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 Leverage Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Leverage Shares 1x, you can compare the effects of market volatilities on Microsoft and Leverage Shares 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 Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Leverage Shares.
Diversification Opportunities for Microsoft and Leverage Shares
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Leverage is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Leverage Shares 1x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 1x 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 Leverage Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leverage Shares 1x has no effect on the direction of Microsoft i.e., Microsoft and Leverage Shares go up and down completely randomly.
Pair Corralation between Microsoft and Leverage Shares
Given the investment horizon of 90 days Microsoft is expected to generate 0.68 times more return on investment than Leverage Shares. However, Microsoft is 1.46 times less risky than Leverage Shares. It trades about -0.01 of its potential returns per unit of risk. Leverage Shares 1x is currently generating about -0.06 per unit of risk. If you would invest 41,113 in Microsoft on November 29, 2024 and sell it today you would lose (1,303) from holding Microsoft or give up 3.17% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 97.88% |
Values | Daily Returns |
Microsoft vs. Leverage Shares 1x
Performance |
Timeline |
Microsoft |
Leverage Shares 1x |
Microsoft and Leverage Shares Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and Leverage Shares
The main advantage of trading using opposite Microsoft and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Leverage Shares 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 Leverage Shares will offset losses from the drop in Leverage Shares' long position.Microsoft vs. Palo Alto Networks | ||
Microsoft vs. Uipath Inc | ||
Microsoft vs. Adobe Systems Incorporated | ||
Microsoft vs. Crowdstrike Holdings |
Leverage Shares vs. Leverage Shares 3x | ||
Leverage Shares vs. Leverage Shares 3x | ||
Leverage Shares vs. Leverage Shares 3x | ||
Leverage Shares vs. Leverage Shares 3x |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |