Correlation Between Microsoft and THERMO FISHER
Can any of the company-specific risk be diversified away by investing in both Microsoft and THERMO FISHER 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 THERMO FISHER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and THERMO FISHER SCIEN, you can compare the effects of market volatilities on Microsoft and THERMO FISHER 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 THERMO FISHER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and THERMO FISHER.
Diversification Opportunities for Microsoft and THERMO FISHER
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and THERMO is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and THERMO FISHER SCIEN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THERMO FISHER SCIEN 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 THERMO FISHER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THERMO FISHER SCIEN has no effect on the direction of Microsoft i.e., Microsoft and THERMO FISHER go up and down completely randomly.
Pair Corralation between Microsoft and THERMO FISHER
Assuming the 90 days trading horizon Microsoft is expected to generate 0.95 times more return on investment than THERMO FISHER. However, Microsoft is 1.05 times less risky than THERMO FISHER. It trades about 0.03 of its potential returns per unit of risk. THERMO FISHER SCIEN is currently generating about -0.07 per unit of risk. If you would invest 39,292 in Microsoft on August 24, 2024 and sell it today you would earn a total of 393.00 from holding Microsoft or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Microsoft vs. THERMO FISHER SCIEN
Performance |
| Timeline |
| Microsoft |
| THERMO FISHER SCIEN |
Microsoft and THERMO FISHER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and THERMO FISHER
The main advantage of trading using opposite Microsoft and THERMO FISHER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, THERMO FISHER 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 THERMO FISHER will offset losses from the drop in THERMO FISHER's long position.| Microsoft vs. Norwegian Air Shuttle | Microsoft vs. Sunny Optical Technology | Microsoft vs. X FAB Silicon Foundries | Microsoft vs. DELTA AIR LINES |
| THERMO FISHER vs. SHIP HEALTHCARE HLDGINC | THERMO FISHER vs. National Health Investors | THERMO FISHER vs. REVO INSURANCE SPA | THERMO FISHER vs. FEMALE HEALTH |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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