Correlation Between Microsoft and AdvisorShares STAR
Can any of the company-specific risk be diversified away by investing in both Microsoft and AdvisorShares STAR 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 AdvisorShares STAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and AdvisorShares STAR Global, you can compare the effects of market volatilities on Microsoft and AdvisorShares STAR 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 AdvisorShares STAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and AdvisorShares STAR.
Diversification Opportunities for Microsoft and AdvisorShares STAR
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Microsoft and AdvisorShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and AdvisorShares STAR Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares STAR 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 AdvisorShares STAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares STAR Global has no effect on the direction of Microsoft i.e., Microsoft and AdvisorShares STAR go up and down completely randomly.
Pair Corralation between Microsoft and AdvisorShares STAR
Given the investment horizon of 90 days Microsoft is expected to under-perform the AdvisorShares STAR. In addition to that, Microsoft is 2.76 times more volatile than AdvisorShares STAR Global. It trades about -0.03 of its total potential returns per unit of risk. AdvisorShares STAR Global is currently generating about 0.18 per unit of volatility. If you would invest 4,675 in AdvisorShares STAR Global on May 29, 2025 and sell it today you would earn a total of 87.00 from holding AdvisorShares STAR Global or generate 1.86% 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. AdvisorShares STAR Global
Performance |
| Timeline |
| Microsoft |
| AdvisorShares STAR Global |
Microsoft and AdvisorShares STAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and AdvisorShares STAR
The main advantage of trading using opposite Microsoft and AdvisorShares STAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, AdvisorShares STAR 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 AdvisorShares STAR will offset losses from the drop in AdvisorShares STAR's long position.| Microsoft vs. Palantir Technologies Class | Microsoft vs. Crowdstrike Holdings | Microsoft vs. Oracle | Microsoft vs. CoreWeave, Class A |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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