Correlation Between Microsoft and Global Strategist
Can any of the company-specific risk be diversified away by investing in both Microsoft and Global Strategist 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 Global Strategist into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Global Strategist Portfolio, you can compare the effects of market volatilities on Microsoft and Global Strategist 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 Global Strategist. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Global Strategist.
Diversification Opportunities for Microsoft and Global Strategist
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Microsoft and Global is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Global Strategist Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Strategist 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 Global Strategist. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Strategist has no effect on the direction of Microsoft i.e., Microsoft and Global Strategist go up and down completely randomly.
Pair Corralation between Microsoft and Global Strategist
Given the investment horizon of 90 days Microsoft is expected to generate 1.72 times more return on investment than Global Strategist. However, Microsoft is 1.72 times more volatile than Global Strategist Portfolio. It trades about 0.54 of its potential returns per unit of risk. Global Strategist Portfolio is currently generating about 0.28 per unit of risk. If you would invest 46,197 in Microsoft on April 1, 2025 and sell it today you would earn a total of 3,397 from holding Microsoft or generate 7.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Global Strategist Portfolio
Performance |
| Timeline |
| Microsoft |
| Global Strategist |
Microsoft and Global Strategist Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Global Strategist
The main advantage of trading using opposite Microsoft and Global Strategist positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Global Strategist 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 Global Strategist will offset losses from the drop in Global Strategist's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Global Strategist vs. Pro Blend Moderate Term | Global Strategist vs. Sa Worldwide Moderate | Global Strategist vs. Tiaa Cref Lifestyle Moderate | Global Strategist vs. Wealthbuilder Moderate Balanced |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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