This module allows you to analyze existing cross correlation between Microsoft Corporation and Alphabet. You can compare the effects of market volatilities on Microsoft and Alphabet 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 Alphabet. See also your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Alphabet.
|Horizon||30 Days Login to change|
Over the last 30 days Microsoft Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively unchanging essential indicators, Microsoft is not utilizing all of its potentials. The recent stock price uproar, may contribute to short horizon losses for the leadership.
Over the last 30 days Alphabet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak fundamental drivers, Alphabet may actually be approaching a critical reversion point that can send shares even higher in September 2019.
Microsoft and Alphabet Volatility Contrast
Predicted Return Density
Microsoft Corp. vs. Alphabet Inc
Given the investment horizon of 30 days, Microsoft is expected to generate 10.7 times less return on investment than Alphabet. But when comparing it to its historical volatility, Microsoft Corporation is 1.53 times less risky than Alphabet. It trades about 0.01 of its potential returns per unit of risk. Alphabet is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 110,233 in Alphabet on July 19, 2019 and sell it today you would earn a total of 7,527 from holding Alphabet or generate 6.83% return on investment over 30 days.
Pair Corralation between Microsoft and Alphabet
|Time Period||2 Months [change]|
Diversification Opportunities for Microsoft and Alphabet
Very weak diversification
Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp. and Alphabet Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Alphabet 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 Corporation are associated (or correlated) with Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet has no effect on the direction of Microsoft i.e. Microsoft and Alphabet go up and down completely randomly.
See also your portfolio center. Please also try Chance of Distress module to get analysis of equity chance of financial distress in the next 2 years.