Correlation Between Microsoft and Vishay Intertechnology
Can any of the company-specific risk be diversified away by investing in both Microsoft and Vishay Intertechnology 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 Intertechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Vishay Intertechnology, you can compare the effects of market volatilities on Microsoft and Vishay Intertechnology 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 Intertechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Vishay Intertechnology.
Diversification Opportunities for Microsoft and Vishay Intertechnology
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Vishay is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Vishay Intertechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Intertechnology 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 Intertechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Intertechnology has no effect on the direction of Microsoft i.e., Microsoft and Vishay Intertechnology go up and down completely randomly.
Pair Corralation between Microsoft and Vishay Intertechnology
Assuming the 90 days trading horizon Microsoft is expected to generate 0.66 times more return on investment than Vishay Intertechnology. However, Microsoft is 1.51 times less risky than Vishay Intertechnology. It trades about 0.07 of its potential returns per unit of risk. Vishay Intertechnology is currently generating about -0.1 per unit of risk. If you would invest 38,389 in Microsoft on August 28, 2024 and sell it today you would earn a total of 1,456 from holding Microsoft or generate 3.79% 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. Vishay Intertechnology
Performance |
| Timeline |
| Microsoft |
| Vishay Intertechnology |
Microsoft and Vishay Intertechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Vishay Intertechnology
The main advantage of trading using opposite Microsoft and Vishay Intertechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Vishay Intertechnology 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 Intertechnology will offset losses from the drop in Vishay Intertechnology's long position.| Microsoft vs. Pentair plc | Microsoft vs. NORWEGIAN AIR SHUT | Microsoft vs. GEAR4MUSIC LS 10 | Microsoft vs. Fair Isaac Corp |
| Vishay Intertechnology vs. Apple Inc | Vishay Intertechnology vs. Apple Inc | Vishay Intertechnology vs. Apple Inc | Vishay Intertechnology 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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