Correlation Between Microsoft and GELSENWASSER
Can any of the company-specific risk be diversified away by investing in both Microsoft and GELSENWASSER 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 GELSENWASSER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and GELSENWASSER, you can compare the effects of market volatilities on Microsoft and GELSENWASSER 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 GELSENWASSER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and GELSENWASSER.
Diversification Opportunities for Microsoft and GELSENWASSER
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and GELSENWASSER is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and GELSENWASSER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GELSENWASSER 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 GELSENWASSER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GELSENWASSER has no effect on the direction of Microsoft i.e., Microsoft and GELSENWASSER go up and down completely randomly.
Pair Corralation between Microsoft and GELSENWASSER
Assuming the 90 days trading horizon Microsoft is expected to generate 0.86 times more return on investment than GELSENWASSER. However, Microsoft is 1.16 times less risky than GELSENWASSER. It trades about 0.18 of its potential returns per unit of risk. GELSENWASSER is currently generating about 0.01 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. GELSENWASSER
Performance |
| Timeline |
| Microsoft |
| GELSENWASSER |
Microsoft and GELSENWASSER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and GELSENWASSER
The main advantage of trading using opposite Microsoft and GELSENWASSER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, GELSENWASSER 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 GELSENWASSER will offset losses from the drop in GELSENWASSER's long position.| Microsoft vs. MAVEN WIRELESS SWEDEN | Microsoft vs. GREENX METALS LTD | Microsoft vs. MTI WIRELESS EDGE | Microsoft vs. Magic Software Enterprises |
| GELSENWASSER vs. T Mobile | GELSENWASSER vs. Verizon Communications | GELSENWASSER vs. China BlueChemical | GELSENWASSER vs. T MOBILE US |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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