Correlation Between MicroStrategy Incorporated and Fastbase

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

By analyzing existing cross correlation between MicroStrategy Incorporated and Fastbase, you can compare the effects of market volatilities on MicroStrategy Incorporated and Fastbase 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 MicroStrategy Incorporated with a short position of Fastbase. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroStrategy Incorporated and Fastbase.

Diversification Opportunities for MicroStrategy Incorporated and Fastbase

-0.45

Correlation Coefficient

MicroStrategy Incorporated  Fastbase

Very good diversification

The 3 months correlation between MicroStrategy and Fastbase is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding MicroStrategy Incorporated and Fastbase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastbase and MicroStrategy Incorporated 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 MicroStrategy Incorporated are associated (or correlated) with Fastbase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastbase has no effect on the direction of MicroStrategy Incorporated i.e., MicroStrategy Incorporated and Fastbase go up and down completely randomly.

Pair Corralation between MicroStrategy Incorporated and Fastbase

Given the investment horizon of 90 days MicroStrategy Incorporated is expected to generate 1.16 times less return on investment than Fastbase. But when comparing it to its historical volatility, MicroStrategy Incorporated is 2.52 times less risky than Fastbase. It trades about 0.13 of its potential returns per unit of risk. Fastbase is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  225.00  in Fastbase on October 11, 2024 and sell it today you would lose (95.00) from holding Fastbase or give up 42.22% of portfolio value over 90 days.

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

MicroStrategy Incorporated  vs.  Fastbase

MicroStrategy Incorporated

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MicroStrategy Incorporated are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, MicroStrategy Incorporated reported solid returns over the last few months and may actually be approaching a breakup point.

Fastbase

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fastbase are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Fastbase exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MicroStrategy Incorporated and Fastbase

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

The idea behind MicroStrategy Incorporated and Fastbase 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.