Correlation Between Microsoft and BANK HANDLOWY
Can any of the company-specific risk be diversified away by investing in both Microsoft and BANK HANDLOWY 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 BANK HANDLOWY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and BANK HANDLOWY, you can compare the effects of market volatilities on Microsoft and BANK HANDLOWY 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 BANK HANDLOWY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and BANK HANDLOWY.
Diversification Opportunities for Microsoft and BANK HANDLOWY
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microsoft and BANK is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and BANK HANDLOWY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK HANDLOWY 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 BANK HANDLOWY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK HANDLOWY has no effect on the direction of Microsoft i.e., Microsoft and BANK HANDLOWY go up and down completely randomly.
Pair Corralation between Microsoft and BANK HANDLOWY
Assuming the 90 days trading horizon Microsoft is expected to generate 4.62 times more return on investment than BANK HANDLOWY. However, Microsoft is 4.62 times more volatile than BANK HANDLOWY. It trades about 0.01 of its potential returns per unit of risk. BANK HANDLOWY is currently generating about -0.35 per unit of risk. If you would invest 39,991 in Microsoft on August 31, 2024 and sell it today you would earn a total of 19.00 from holding Microsoft or generate 0.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. BANK HANDLOWY
Performance |
| Timeline |
| Microsoft |
| BANK HANDLOWY |
Microsoft and BANK HANDLOWY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and BANK HANDLOWY
The main advantage of trading using opposite Microsoft and BANK HANDLOWY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, BANK HANDLOWY 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 BANK HANDLOWY will offset losses from the drop in BANK HANDLOWY's long position.| Microsoft vs. Gruppo Mutuionline SpA | Microsoft vs. Air New Zealand | Microsoft vs. Ryanair Holdings plc | Microsoft vs. Salesforce |
| BANK HANDLOWY vs. Transport International Holdings | BANK HANDLOWY vs. JAPAN TOBACCO UNSPADR12 | BANK HANDLOWY vs. COPLAND ROAD CAPITAL | BANK HANDLOWY vs. Liberty Broadband |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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