Correlation Between Microsoft and Smartfit Escola

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

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

Diversification Opportunities for Microsoft and Smartfit Escola

-0.58

Correlation Coefficient

Microsoft  Smartfit Escola

Excellent diversification

The 3 months correlation between Microsoft and Smartfit is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Smartfit Escola de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smartfit Escola de 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 Smartfit Escola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smartfit Escola de has no effect on the direction of Microsoft i.e., Microsoft and Smartfit Escola go up and down completely randomly.

Pair Corralation between Microsoft and Smartfit Escola

Assuming the 90 days trading horizon Microsoft is expected to generate 0.64 times more return on investment than Smartfit Escola. However, Microsoft is 1.57 times less risky than Smartfit Escola. It trades about 0.1 of its potential returns per unit of risk. Smartfit Escola de is currently generating about -0.1 per unit of risk. If you would invest  9,907  in Microsoft on October 20, 2024 and sell it today you would earn a total of  933.00  from holding Microsoft or generate 9.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Microsoft  vs.  Smartfit Escola de

Microsoft

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Microsoft may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Smartfit Escola de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smartfit Escola de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Microsoft and Smartfit Escola

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

The idea behind Microsoft and Smartfit Escola de 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.