Correlation Between Microsoft and KORN FERRY
Can any of the company-specific risk be diversified away by investing in both Microsoft and KORN FERRY 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 KORN FERRY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and KORN FERRY INTL, you can compare the effects of market volatilities on Microsoft and KORN FERRY 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 KORN FERRY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and KORN FERRY.
Diversification Opportunities for Microsoft and KORN FERRY
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microsoft and KORN is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and KORN FERRY INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KORN FERRY INTL 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 KORN FERRY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KORN FERRY INTL has no effect on the direction of Microsoft i.e., Microsoft and KORN FERRY go up and down completely randomly.
Pair Corralation between Microsoft and KORN FERRY
Assuming the 90 days trading horizon Microsoft is expected to generate 3.94 times less return on investment than KORN FERRY. But when comparing it to its historical volatility, Microsoft is 1.5 times less risky than KORN FERRY. It trades about 0.03 of its potential returns per unit of risk. KORN FERRY INTL is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,980 in KORN FERRY INTL on September 1, 2024 and sell it today you would earn a total of 1,370 from holding KORN FERRY INTL or generate 22.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.24% |
| Values | Daily Returns |
Microsoft vs. KORN FERRY INTL
Performance |
| Timeline |
| Microsoft |
| KORN FERRY INTL |
Microsoft and KORN FERRY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and KORN FERRY
The main advantage of trading using opposite Microsoft and KORN FERRY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, KORN FERRY 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 KORN FERRY will offset losses from the drop in KORN FERRY's long position.| Microsoft vs. MARKET VECTR RETAIL | Microsoft vs. LG Electronics | Microsoft vs. AOI Electronics Co | Microsoft vs. SIDETRADE EO 1 |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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