Correlation Between Microsoft and INTER CARS
Can any of the company-specific risk be diversified away by investing in both Microsoft and INTER CARS 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 INTER CARS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and INTER CARS SA, you can compare the effects of market volatilities on Microsoft and INTER CARS 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 INTER CARS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and INTER CARS.
Diversification Opportunities for Microsoft and INTER CARS
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and INTER is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and INTER CARS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTER CARS SA 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 INTER CARS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTER CARS SA has no effect on the direction of Microsoft i.e., Microsoft and INTER CARS go up and down completely randomly.
Pair Corralation between Microsoft and INTER CARS
Assuming the 90 days trading horizon Microsoft is expected to generate 1.18 times more return on investment than INTER CARS. However, Microsoft is 1.18 times more volatile than INTER CARS SA. It trades about 0.01 of its potential returns per unit of risk. INTER CARS SA is currently generating about -0.01 per unit of risk. If you would invest 39,812 in Microsoft on August 27, 2024 and sell it today you would lose (72.00) from holding Microsoft or give up 0.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. INTER CARS SA
Performance |
| Timeline |
| Microsoft |
| INTER CARS SA |
Microsoft and INTER CARS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and INTER CARS
The main advantage of trading using opposite Microsoft and INTER CARS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, INTER CARS 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 INTER CARS will offset losses from the drop in INTER CARS's long position.| Microsoft vs. United Airlines Holdings | Microsoft vs. JAPAN AIRLINES | Microsoft vs. G III APPAREL GROUP | Microsoft vs. LIFENET INSURANCE CO |
| INTER CARS vs. Superior Plus Corp | INTER CARS vs. NMI Holdings | INTER CARS vs. Origin Agritech | INTER CARS vs. SIVERS SEMICONDUCTORS AB |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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