Correlation Between Microsoft and AFFLUENT MEDICAL
Can any of the company-specific risk be diversified away by investing in both Microsoft and AFFLUENT 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 AFFLUENT MEDICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and AFFLUENT MEDICAL SAS, you can compare the effects of market volatilities on Microsoft and AFFLUENT 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 AFFLUENT MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and AFFLUENT MEDICAL.
Diversification Opportunities for Microsoft and AFFLUENT MEDICAL
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microsoft and AFFLUENT is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and AFFLUENT MEDICAL SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFFLUENT MEDICAL SAS 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 AFFLUENT MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFFLUENT MEDICAL SAS has no effect on the direction of Microsoft i.e., Microsoft and AFFLUENT MEDICAL go up and down completely randomly.
Pair Corralation between Microsoft and AFFLUENT MEDICAL
Assuming the 90 days trading horizon Microsoft is expected to generate 0.36 times more return on investment than AFFLUENT MEDICAL. However, Microsoft is 2.82 times less risky than AFFLUENT MEDICAL. It trades about 0.0 of its potential returns per unit of risk. AFFLUENT MEDICAL SAS is currently generating about 0.0 per unit of risk. If you would invest 41,559 in Microsoft on October 13, 2024 and sell it today you would lose (374.00) from holding Microsoft or give up 0.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. AFFLUENT MEDICAL SAS
Performance |
| Timeline |
| Microsoft |
| AFFLUENT MEDICAL SAS |
Microsoft and AFFLUENT MEDICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and AFFLUENT MEDICAL
The main advantage of trading using opposite Microsoft and AFFLUENT MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, AFFLUENT 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 AFFLUENT MEDICAL will offset losses from the drop in AFFLUENT MEDICAL's long position.| Microsoft vs. Chengdu PUTIAN Telecommunications | Microsoft vs. ASURE SOFTWARE | Microsoft vs. Citic Telecom International | Microsoft vs. Easy Software AG |
| AFFLUENT MEDICAL vs. Apple Inc | AFFLUENT MEDICAL vs. Apple Inc | AFFLUENT MEDICAL vs. Apple Inc | AFFLUENT MEDICAL vs. Apple Inc |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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