Correlation Between Microsoft and EVS Broadcast
Can any of the company-specific risk be diversified away by investing in both Microsoft and EVS Broadcast 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 EVS Broadcast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and EVS Broadcast Equipment, you can compare the effects of market volatilities on Microsoft and EVS Broadcast 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 EVS Broadcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and EVS Broadcast.
Diversification Opportunities for Microsoft and EVS Broadcast
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microsoft and EVS is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and EVS Broadcast Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVS Broadcast Equipment 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 EVS Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVS Broadcast Equipment has no effect on the direction of Microsoft i.e., Microsoft and EVS Broadcast go up and down completely randomly.
Pair Corralation between Microsoft and EVS Broadcast
Assuming the 90 days trading horizon Microsoft is expected to generate 0.92 times more return on investment than EVS Broadcast. However, Microsoft is 1.08 times less risky than EVS Broadcast. It trades about 0.09 of its potential returns per unit of risk. EVS Broadcast Equipment is currently generating about 0.06 per unit of risk. If you would invest 24,112 in Microsoft on November 1, 2024 and sell it today you would earn a total of 18,398 from holding Microsoft or generate 76.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. EVS Broadcast Equipment
Performance |
| Timeline |
| Microsoft |
| EVS Broadcast Equipment |
Microsoft and EVS Broadcast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and EVS Broadcast
The main advantage of trading using opposite Microsoft and EVS Broadcast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, EVS Broadcast 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 EVS Broadcast will offset losses from the drop in EVS Broadcast's long position.| Microsoft vs. PEPTONIC MEDICAL | Microsoft vs. MeVis Medical Solutions | Microsoft vs. Inspire Medical Systems | Microsoft vs. Genertec Universal Medical |
| EVS Broadcast vs. Suntory Beverage Food | EVS Broadcast vs. The Boston Beer | EVS Broadcast vs. Prosiebensat 1 Media | EVS Broadcast vs. MOLSON RS BEVERAGE |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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