Correlation Between Microsoft and Multi Manager
Can any of the company-specific risk be diversified away by investing in both Microsoft and Multi Manager 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 Multi Manager into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Multi Manager Directional Alternative, you can compare the effects of market volatilities on Microsoft and Multi Manager 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 Multi Manager. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Multi Manager.
Diversification Opportunities for Microsoft and Multi Manager
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Microsoft and Multi is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Multi Manager Directional Alte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Manager Direct 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 Multi Manager. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Manager Direct has no effect on the direction of Microsoft i.e., Microsoft and Multi Manager go up and down completely randomly.
Pair Corralation between Microsoft and Multi Manager
Given the investment horizon of 90 days Microsoft is expected to generate 2.72 times more return on investment than Multi Manager. However, Microsoft is 2.72 times more volatile than Multi Manager Directional Alternative. It trades about 0.37 of its potential returns per unit of risk. Multi Manager Directional Alternative is currently generating about 0.2 per unit of risk. If you would invest 39,044 in Microsoft on April 28, 2025 and sell it today you would earn a total of 12,327 from holding Microsoft or generate 31.57% 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. Multi Manager Directional Alte
Performance |
Timeline |
Microsoft |
Multi Manager Direct |
Microsoft and Multi Manager Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and Multi Manager
The main advantage of trading using opposite Microsoft and Multi Manager positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Multi Manager 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 Multi Manager will offset losses from the drop in Multi Manager'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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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