Correlation Between Microsoft and NORDIC HALIBUT
Can any of the company-specific risk be diversified away by investing in both Microsoft and NORDIC HALIBUT 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 NORDIC HALIBUT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and NORDIC HALIBUT AS, you can compare the effects of market volatilities on Microsoft and NORDIC HALIBUT 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 NORDIC HALIBUT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and NORDIC HALIBUT.
Diversification Opportunities for Microsoft and NORDIC HALIBUT
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microsoft and NORDIC is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and NORDIC HALIBUT AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORDIC HALIBUT 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 NORDIC HALIBUT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORDIC HALIBUT AS has no effect on the direction of Microsoft i.e., Microsoft and NORDIC HALIBUT go up and down completely randomly.
Pair Corralation between Microsoft and NORDIC HALIBUT
Assuming the 90 days trading horizon Microsoft is expected to generate 0.56 times more return on investment than NORDIC HALIBUT. However, Microsoft is 1.78 times less risky than NORDIC HALIBUT. It trades about 0.2 of its potential returns per unit of risk. NORDIC HALIBUT AS is currently generating about -0.24 per unit of risk. If you would invest 37,655 in Microsoft on September 1, 2024 and sell it today you would earn a total of 2,230 from holding Microsoft or generate 5.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. NORDIC HALIBUT AS
Performance |
| Timeline |
| Microsoft |
| NORDIC HALIBUT AS |
Microsoft and NORDIC HALIBUT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and NORDIC HALIBUT
The main advantage of trading using opposite Microsoft and NORDIC HALIBUT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, NORDIC HALIBUT 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 NORDIC HALIBUT will offset losses from the drop in NORDIC HALIBUT's long position.| Microsoft vs. Pentair plc | Microsoft vs. Norwegian Air Shuttle | Microsoft vs. GEELY AUTOMOBILE | Microsoft vs. DELTA AIR LINES |
| NORDIC HALIBUT vs. Apple Inc | NORDIC HALIBUT vs. Apple Inc | NORDIC HALIBUT vs. Apple Inc | NORDIC HALIBUT vs. Apple Inc |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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