Correlation Between Microsoft and CREO MEDICAL
Can any of the company-specific risk be diversified away by investing in both Microsoft and CREO MEDICAL 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 CREO MEDICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and CREO MEDICAL GRP, you can compare the effects of market volatilities on Microsoft and CREO MEDICAL 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 CREO MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and CREO MEDICAL.
Diversification Opportunities for Microsoft and CREO MEDICAL
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microsoft and CREO is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and CREO MEDICAL GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CREO MEDICAL GRP 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 CREO MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CREO MEDICAL GRP has no effect on the direction of Microsoft i.e., Microsoft and CREO MEDICAL go up and down completely randomly.
Pair Corralation between Microsoft and CREO MEDICAL
Assuming the 90 days trading horizon Microsoft is expected to under-perform the CREO MEDICAL. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 6.89 times less risky than CREO MEDICAL. The stock trades about -0.23 of its potential returns per unit of risk. The CREO MEDICAL GRP is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 16.00 in CREO MEDICAL GRP on October 11, 2024 and sell it today you would earn a total of 6.00 from holding CREO MEDICAL GRP or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Microsoft vs. CREO MEDICAL GRP
Performance |
| Timeline |
| Microsoft |
| CREO MEDICAL GRP |
Microsoft and CREO MEDICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and CREO MEDICAL
The main advantage of trading using opposite Microsoft and CREO MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, CREO MEDICAL 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 CREO MEDICAL will offset losses from the drop in CREO MEDICAL's long position.| Microsoft vs. INTERCONT HOTELS | Microsoft vs. PPHE HOTEL GROUP | Microsoft vs. Suntory Beverage Food | Microsoft vs. MHP Hotel AG |
| CREO MEDICAL vs. Yanzhou Coal Mining | CREO MEDICAL vs. DATA MODUL | CREO MEDICAL vs. DATAGROUP SE | CREO MEDICAL vs. Linedata Services SA |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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