Correlation Between Microsoft and HEINEKEN
Can any of the company-specific risk be diversified away by investing in both Microsoft and HEINEKEN 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 HEINEKEN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and HEINEKEN SP ADR, you can compare the effects of market volatilities on Microsoft and HEINEKEN 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 HEINEKEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and HEINEKEN.
Diversification Opportunities for Microsoft and HEINEKEN
Excellent diversification
The 3 months correlation between Microsoft and HEINEKEN is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and HEINEKEN SP ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEINEKEN SP ADR 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 HEINEKEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEINEKEN SP ADR has no effect on the direction of Microsoft i.e., Microsoft and HEINEKEN go up and down completely randomly.
Pair Corralation between Microsoft and HEINEKEN
Assuming the 90 days trading horizon Microsoft is expected to generate 1.04 times more return on investment than HEINEKEN. However, Microsoft is 1.04 times more volatile than HEINEKEN SP ADR. It trades about 0.07 of its potential returns per unit of risk. HEINEKEN SP ADR is currently generating about -0.01 per unit of risk. If you would invest 23,483 in Microsoft on December 1, 2024 and sell it today you would earn a total of 14,092 from holding Microsoft or generate 60.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. HEINEKEN SP ADR
Performance |
| Timeline |
| Microsoft |
| HEINEKEN SP ADR |
Microsoft and HEINEKEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and HEINEKEN
The main advantage of trading using opposite Microsoft and HEINEKEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, HEINEKEN 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 HEINEKEN will offset losses from the drop in HEINEKEN's long position.| Microsoft vs. Q2M Managementberatung AG | Microsoft vs. ASPEN TECHINC DL | Microsoft vs. CEOTRONICS | Microsoft vs. AGF Management Limited |
| HEINEKEN vs. THAI BEVERAGE | HEINEKEN vs. Gol Intelligent Airlines | HEINEKEN vs. SALESFORCE INC CDR | HEINEKEN vs. Suntory Beverage Food |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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