Correlation Between Nomad Foods and Microsoft
Can any of the company-specific risk be diversified away by investing in both Nomad Foods 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 Nomad Foods and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nomad Foods and Microsoft, you can compare the effects of market volatilities on Nomad Foods 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 Nomad Foods with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomad Foods and Microsoft.
Diversification Opportunities for Nomad Foods and Microsoft
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nomad and Microsoft is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nomad Foods and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Nomad Foods 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 Nomad Foods 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 Nomad Foods i.e., Nomad Foods and Microsoft go up and down completely randomly.
Pair Corralation between Nomad Foods and Microsoft
Assuming the 90 days trading horizon Nomad Foods is expected to under-perform the Microsoft. In addition to that, Nomad Foods is 1.78 times more volatile than Microsoft. It trades about -0.1 of its total potential returns per unit of risk. Microsoft is currently generating about -0.15 per unit of volatility. If you would invest 42,365 in Microsoft on October 11, 2024 and sell it today you would lose (1,065) from holding Microsoft or give up 2.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nomad Foods vs. Microsoft
Performance |
| Timeline |
| Nomad Foods |
| Microsoft |
Nomad Foods and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomad Foods and Microsoft
The main advantage of trading using opposite Nomad Foods and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomad Foods 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.| Nomad Foods vs. Calibre Mining Corp | Nomad Foods vs. GALENA MINING LTD | Nomad Foods vs. ECHO INVESTMENT ZY | Nomad Foods vs. Guangdong Investment Limited |
| Microsoft vs. Thai Beverage Public | Microsoft vs. CN MODERN DAIRY | Microsoft vs. Nomad Foods | Microsoft vs. INDOFOOD AGRI RES |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |