Correlation Between Microsoft and Bayer AG
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By analyzing existing cross correlation between Microsoft and Bayer AG NA, you can compare the effects of market volatilities on Microsoft and Bayer AG 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 Bayer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Bayer AG.
Diversification Opportunities for Microsoft and Bayer AG
Excellent diversification
The 3 months correlation between Microsoft and Bayer is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Bayer AG NA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer AG NA 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 Bayer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer AG NA has no effect on the direction of Microsoft i.e., Microsoft and Bayer AG go up and down completely randomly.
Pair Corralation between Microsoft and Bayer AG
Assuming the 90 days trading horizon Microsoft is expected to generate 0.54 times more return on investment than Bayer AG. However, Microsoft is 1.85 times less risky than Bayer AG. It trades about 0.03 of its potential returns per unit of risk. Bayer AG NA is currently generating about -0.35 per unit of risk. If you would invest 39,761 in Microsoft on August 30, 2024 and sell it today you would earn a total of 399.00 from holding Microsoft or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Microsoft vs. Bayer AG NA
Performance |
| Timeline |
| Microsoft |
| Bayer AG NA |
Microsoft and Bayer AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Bayer AG
The main advantage of trading using opposite Microsoft and Bayer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Bayer AG 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 Bayer AG will offset losses from the drop in Bayer AG's long position.| Microsoft vs. Entravision Communications | Microsoft vs. TITANIUM TRANSPORTGROUP | Microsoft vs. Transportadora de Gas | Microsoft vs. RYU Apparel |
| Bayer AG vs. Park Hotels Resorts | Bayer AG vs. Xenia Hotels Resorts | Bayer AG vs. HYATT HOTELS A | Bayer AG vs. Playa Hotels Resorts |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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