Correlation Between Microsoft and OCEAN GEOLOOP
Can any of the company-specific risk be diversified away by investing in both Microsoft and OCEAN GEOLOOP 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 OCEAN GEOLOOP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and OCEAN GEOLOOP AS NK, you can compare the effects of market volatilities on Microsoft and OCEAN GEOLOOP 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 OCEAN GEOLOOP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and OCEAN GEOLOOP.
Diversification Opportunities for Microsoft and OCEAN GEOLOOP
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microsoft and OCEAN is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and OCEAN GEOLOOP AS NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCEAN GEOLOOP AS 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 OCEAN GEOLOOP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCEAN GEOLOOP AS has no effect on the direction of Microsoft i.e., Microsoft and OCEAN GEOLOOP go up and down completely randomly.
Pair Corralation between Microsoft and OCEAN GEOLOOP
Assuming the 90 days trading horizon Microsoft is expected to generate 0.17 times more return on investment than OCEAN GEOLOOP. However, Microsoft is 5.84 times less risky than OCEAN GEOLOOP. It trades about 0.18 of its potential returns per unit of risk. OCEAN GEOLOOP AS NK is currently generating about -0.15 per unit of risk. If you would invest 37,991 in Microsoft on September 2, 2024 and sell it today you would earn a total of 1,854 from holding Microsoft or generate 4.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. OCEAN GEOLOOP AS NK
Performance |
| Timeline |
| Microsoft |
| OCEAN GEOLOOP AS |
Microsoft and OCEAN GEOLOOP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and OCEAN GEOLOOP
The main advantage of trading using opposite Microsoft and OCEAN GEOLOOP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, OCEAN GEOLOOP 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 OCEAN GEOLOOP will offset losses from the drop in OCEAN GEOLOOP's long position.| Microsoft vs. MAVEN WIRELESS SWEDEN | Microsoft vs. GREENX METALS LTD | Microsoft vs. MTI WIRELESS EDGE | Microsoft vs. Magic Software Enterprises |
| OCEAN GEOLOOP vs. VIRGIN WINES UK | OCEAN GEOLOOP vs. SEI INVESTMENTS | OCEAN GEOLOOP vs. AOYAMA TRADING | OCEAN GEOLOOP vs. CARSALESCOM |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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