Correlation Between Microsoft and ZINC MEDIA
Can any of the company-specific risk be diversified away by investing in both Microsoft and ZINC MEDIA 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 ZINC MEDIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and ZINC MEDIA GR, you can compare the effects of market volatilities on Microsoft and ZINC MEDIA 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 ZINC MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and ZINC MEDIA.
Diversification Opportunities for Microsoft and ZINC MEDIA
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microsoft and ZINC is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and ZINC MEDIA GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZINC MEDIA GR 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 ZINC MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZINC MEDIA GR has no effect on the direction of Microsoft i.e., Microsoft and ZINC MEDIA go up and down completely randomly.
Pair Corralation between Microsoft and ZINC MEDIA
Assuming the 90 days trading horizon Microsoft is expected to generate 1.08 times more return on investment than ZINC MEDIA. However, Microsoft is 1.08 times more volatile than ZINC MEDIA GR. It trades about 0.07 of its potential returns per unit of risk. ZINC MEDIA GR is currently generating about -0.17 per unit of risk. If you would invest 39,496 in Microsoft on August 29, 2024 and sell it today you would earn a total of 1,149 from holding Microsoft or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. ZINC MEDIA GR
Performance |
| Timeline |
| Microsoft |
| ZINC MEDIA GR |
Microsoft and ZINC MEDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and ZINC MEDIA
The main advantage of trading using opposite Microsoft and ZINC MEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, ZINC MEDIA 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 ZINC MEDIA will offset losses from the drop in ZINC MEDIA's long position.| Microsoft vs. Daido Steel Co | Microsoft vs. Safety Insurance Group | Microsoft vs. BLUESCOPE STEEL | Microsoft vs. Reinsurance Group of |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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