Correlation Between Microsoft and Hexagon Purus
Can any of the company-specific risk be diversified away by investing in both Microsoft and Hexagon Purus 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 Hexagon Purus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Hexagon Purus AS, you can compare the effects of market volatilities on Microsoft and Hexagon Purus 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 Hexagon Purus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Hexagon Purus.
Diversification Opportunities for Microsoft and Hexagon Purus
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microsoft and Hexagon is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Hexagon Purus AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexagon Purus 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 Hexagon Purus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexagon Purus AS has no effect on the direction of Microsoft i.e., Microsoft and Hexagon Purus go up and down completely randomly.
Pair Corralation between Microsoft and Hexagon Purus
Assuming the 90 days trading horizon Microsoft is expected to generate 0.4 times more return on investment than Hexagon Purus. However, Microsoft is 2.47 times less risky than Hexagon Purus. It trades about 0.01 of its potential returns per unit of risk. Hexagon Purus AS is currently generating about -0.29 per unit of risk. If you would invest 40,115 in Microsoft on August 30, 2024 and sell it today you would earn a total of 25.00 from holding Microsoft or generate 0.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Hexagon Purus AS
Performance |
| Timeline |
| Microsoft |
| Hexagon Purus AS |
Microsoft and Hexagon Purus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Hexagon Purus
The main advantage of trading using opposite Microsoft and Hexagon Purus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Hexagon Purus 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 Hexagon Purus will offset losses from the drop in Hexagon Purus' long position.| Microsoft vs. PennantPark Investment | Microsoft vs. Chuangs China Investments | Microsoft vs. WisdomTree Investments | Microsoft vs. SEI INVESTMENTS |
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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