Correlation Between Microsoft and Adecco Group
Can any of the company-specific risk be diversified away by investing in both Microsoft and Adecco Group 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 Adecco Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Adecco Group AG, you can compare the effects of market volatilities on Microsoft and Adecco Group 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 Adecco Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Adecco Group.
Diversification Opportunities for Microsoft and Adecco Group
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microsoft and Adecco is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Adecco Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecco Group AG 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 Adecco Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adecco Group AG has no effect on the direction of Microsoft i.e., Microsoft and Adecco Group go up and down completely randomly.
Pair Corralation between Microsoft and Adecco Group
Assuming the 90 days trading horizon Microsoft is expected to generate 0.83 times more return on investment than Adecco Group. However, Microsoft is 1.21 times less risky than Adecco Group. It trades about 0.03 of its potential returns per unit of risk. Adecco Group AG is currently generating about -0.15 per unit of risk. If you would invest 38,751 in Microsoft on September 3, 2024 and sell it today you would earn a total of 1,239 from holding Microsoft or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Microsoft vs. Adecco Group AG
Performance |
| Timeline |
| Microsoft |
| Adecco Group AG |
Microsoft and Adecco Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Adecco Group
The main advantage of trading using opposite Microsoft and Adecco Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Adecco Group 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 Adecco Group will offset losses from the drop in Adecco Group's long position.| Microsoft vs. ATRYS HEALTH SA | Microsoft vs. CHINA TONTINE WINES | Microsoft vs. Cardinal Health | Microsoft vs. National Health Investors |
| Adecco Group vs. Eastman Chemical | Adecco Group vs. CarsalesCom | Adecco Group vs. CODERE ONLINE LUX | Adecco Group vs. BOS BETTER ONLINE |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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