Correlation Between Microsoft and GWILLI FOOD
Can any of the company-specific risk be diversified away by investing in both Microsoft and GWILLI FOOD 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 GWILLI FOOD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and GWILLI FOOD, you can compare the effects of market volatilities on Microsoft and GWILLI FOOD 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 GWILLI FOOD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and GWILLI FOOD.
Diversification Opportunities for Microsoft and GWILLI FOOD
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Microsoft and GWILLI is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and GWILLI FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GWILLI FOOD 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 GWILLI FOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GWILLI FOOD has no effect on the direction of Microsoft i.e., Microsoft and GWILLI FOOD go up and down completely randomly.
Pair Corralation between Microsoft and GWILLI FOOD
Assuming the 90 days trading horizon Microsoft is expected to generate 7.26 times less return on investment than GWILLI FOOD. But when comparing it to its historical volatility, Microsoft is 2.55 times less risky than GWILLI FOOD. It trades about 0.05 of its potential returns per unit of risk. GWILLI FOOD is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 895.00 in GWILLI FOOD on October 25, 2024 and sell it today you would earn a total of 645.00 from holding GWILLI FOOD or generate 72.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. GWILLI FOOD
Performance |
| Timeline |
| Microsoft |
| GWILLI FOOD |
Microsoft and GWILLI FOOD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and GWILLI FOOD
The main advantage of trading using opposite Microsoft and GWILLI FOOD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, GWILLI FOOD 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 GWILLI FOOD will offset losses from the drop in GWILLI FOOD's long position.| Microsoft vs. CAL MAINE FOODS | Microsoft vs. SIEM OFFSHORE NEW | Microsoft vs. PREMIER FOODS | Microsoft vs. PLANT VEDA FOODS |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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