Correlation Between Microsoft and VISHAY INTERTECHNOL
Can any of the company-specific risk be diversified away by investing in both Microsoft and VISHAY INTERTECHNOL 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 VISHAY INTERTECHNOL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and VISHAY INTERTECHNOL , you can compare the effects of market volatilities on Microsoft and VISHAY INTERTECHNOL 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 VISHAY INTERTECHNOL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and VISHAY INTERTECHNOL.
Diversification Opportunities for Microsoft and VISHAY INTERTECHNOL
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and VISHAY is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and VISHAY INTERTECHNOL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VISHAY INTERTECHNOL 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 VISHAY INTERTECHNOL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VISHAY INTERTECHNOL has no effect on the direction of Microsoft i.e., Microsoft and VISHAY INTERTECHNOL go up and down completely randomly.
Pair Corralation between Microsoft and VISHAY INTERTECHNOL
Assuming the 90 days trading horizon Microsoft is expected to generate 8.88 times less return on investment than VISHAY INTERTECHNOL. But when comparing it to its historical volatility, Microsoft is 2.13 times less risky than VISHAY INTERTECHNOL. It trades about 0.02 of its potential returns per unit of risk. VISHAY INTERTECHNOL is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,655 in VISHAY INTERTECHNOL on August 30, 2024 and sell it today you would earn a total of 115.00 from holding VISHAY INTERTECHNOL or generate 6.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Microsoft vs. VISHAY INTERTECHNOL
Performance |
| Timeline |
| Microsoft |
| VISHAY INTERTECHNOL |
Microsoft and VISHAY INTERTECHNOL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and VISHAY INTERTECHNOL
The main advantage of trading using opposite Microsoft and VISHAY INTERTECHNOL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, VISHAY INTERTECHNOL 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 VISHAY INTERTECHNOL will offset losses from the drop in VISHAY INTERTECHNOL's long position.| Microsoft vs. EAGLE MATERIALS | Microsoft vs. Applied Materials | Microsoft vs. British American Tobacco | Microsoft vs. ETFS Coffee ETC |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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