Correlation Between Resource America and Microsoft
Can any of the company-specific risk be diversified away by investing in both Resource America and Microsoft 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 Resource America and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Resource America and Microsoft, you can compare the effects of market volatilities on Resource America and Microsoft 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 Resource America with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Resource America and Microsoft.
Diversification Opportunities for Resource America and Microsoft
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Resource and Microsoft is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Resource America and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Resource America 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 Resource America are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Resource America i.e., Resource America and Microsoft go up and down completely randomly.
Pair Corralation between Resource America and Microsoft
If you would invest 40,748 in Microsoft on December 29, 2023 and sell it today you would earn a total of 1,395 from holding Microsoft or generate 3.42% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
Resource America vs. Microsoft
Performance |
Timeline |
Resource America |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Microsoft |
Resource America and Microsoft Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Resource America and Microsoft
The main advantage of trading using opposite Resource America and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Resource America position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.Resource America vs. Tandy Leather Factory | Resource America vs. Rocky Brands | Resource America vs. Sphere Entertainment Co | Resource America vs. Levi Strauss Co |
Microsoft vs. Global Blue Group | Microsoft vs. Aurora Mobile | Microsoft vs. Marqeta | Microsoft vs. Nextnav Acquisition Corp |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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