Correlation Between Microsoft and CDN IMPERIAL
Can any of the company-specific risk be diversified away by investing in both Microsoft and CDN IMPERIAL 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 CDN IMPERIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and CDN IMPERIAL BANK, you can compare the effects of market volatilities on Microsoft and CDN IMPERIAL 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 CDN IMPERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and CDN IMPERIAL.
Diversification Opportunities for Microsoft and CDN IMPERIAL
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microsoft and CDN is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and CDN IMPERIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDN IMPERIAL BANK 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 CDN IMPERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDN IMPERIAL BANK has no effect on the direction of Microsoft i.e., Microsoft and CDN IMPERIAL go up and down completely randomly.
Pair Corralation between Microsoft and CDN IMPERIAL
Assuming the 90 days trading horizon Microsoft is expected to generate 5.84 times less return on investment than CDN IMPERIAL. In addition to that, Microsoft is 1.39 times more volatile than CDN IMPERIAL BANK. It trades about 0.03 of its total potential returns per unit of risk. CDN IMPERIAL BANK is currently generating about 0.26 per unit of volatility. If you would invest 4,390 in CDN IMPERIAL BANK on August 30, 2024 and sell it today you would earn a total of 1,734 from holding CDN IMPERIAL BANK or generate 39.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. CDN IMPERIAL BANK
Performance |
| Timeline |
| Microsoft |
| CDN IMPERIAL BANK |
Microsoft and CDN IMPERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and CDN IMPERIAL
The main advantage of trading using opposite Microsoft and CDN IMPERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, CDN IMPERIAL 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 CDN IMPERIAL will offset losses from the drop in CDN IMPERIAL's long position.| Microsoft vs. PennantPark Investment | Microsoft vs. Chuangs China Investments | Microsoft vs. WisdomTree Investments | Microsoft vs. SEI INVESTMENTS |
| CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Superior Plus Corp | CDN IMPERIAL vs. SIVERS SEMICONDUCTORS AB |
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.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |