Correlation Between Microsoft and PEH WERTPAPIER
Can any of the company-specific risk be diversified away by investing in both Microsoft and PEH WERTPAPIER 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 PEH WERTPAPIER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and PEH WERTPAPIER, you can compare the effects of market volatilities on Microsoft and PEH WERTPAPIER 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 PEH WERTPAPIER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and PEH WERTPAPIER.
Diversification Opportunities for Microsoft and PEH WERTPAPIER
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microsoft and PEH is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and PEH WERTPAPIER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEH WERTPAPIER 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 PEH WERTPAPIER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEH WERTPAPIER has no effect on the direction of Microsoft i.e., Microsoft and PEH WERTPAPIER go up and down completely randomly.
Pair Corralation between Microsoft and PEH WERTPAPIER
Assuming the 90 days trading horizon Microsoft is expected to generate 1.16 times more return on investment than PEH WERTPAPIER. However, Microsoft is 1.16 times more volatile than PEH WERTPAPIER. It trades about 0.06 of its potential returns per unit of risk. PEH WERTPAPIER is currently generating about 0.04 per unit of risk. If you would invest 34,125 in Microsoft on September 4, 2024 and sell it today you would earn a total of 6,990 from holding Microsoft or generate 20.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Microsoft vs. PEH WERTPAPIER
Performance |
| Timeline |
| Microsoft |
| PEH WERTPAPIER |
Microsoft and PEH WERTPAPIER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and PEH WERTPAPIER
The main advantage of trading using opposite Microsoft and PEH WERTPAPIER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, PEH WERTPAPIER 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 PEH WERTPAPIER will offset losses from the drop in PEH WERTPAPIER's long position.| Microsoft vs. Vulcan Materials | Microsoft vs. Hyster Yale Materials Handling | Microsoft vs. CODERE ONLINE LUX | Microsoft vs. Lamar Advertising |
| PEH WERTPAPIER vs. Gamma Communications plc | PEH WERTPAPIER vs. Charter Communications | PEH WERTPAPIER vs. Citic Telecom International | PEH WERTPAPIER vs. American Eagle Outfitters |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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