Correlation Between Microsoft and Takkt AG
Can any of the company-specific risk be diversified away by investing in both Microsoft and Takkt AG 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 Takkt AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Takkt AG, you can compare the effects of market volatilities on Microsoft and Takkt AG 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 Takkt AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Takkt AG.
Diversification Opportunities for Microsoft and Takkt AG
Excellent diversification
The 3 months correlation between Microsoft and Takkt is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Takkt AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Takkt AG 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 Takkt AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Takkt AG has no effect on the direction of Microsoft i.e., Microsoft and Takkt AG go up and down completely randomly.
Pair Corralation between Microsoft and Takkt AG
Assuming the 90 days trading horizon Microsoft is expected to generate 1.82 times more return on investment than Takkt AG. However, Microsoft is 1.82 times more volatile than Takkt AG. It trades about 0.04 of its potential returns per unit of risk. Takkt AG is currently generating about -0.6 per unit of risk. If you would invest 39,342 in Microsoft on August 28, 2024 and sell it today you would earn a total of 568.00 from holding Microsoft or generate 1.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Takkt AG
Performance |
| Timeline |
| Microsoft |
| Takkt AG |
Microsoft and Takkt AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Takkt AG
The main advantage of trading using opposite Microsoft and Takkt AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Takkt AG 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 Takkt AG will offset losses from the drop in Takkt AG's long position.| Microsoft vs. Media and Games | Microsoft vs. Martin Marietta Materials | Microsoft vs. Summit Materials | Microsoft vs. Vulcan Materials |
| Takkt AG vs. Lion One Metals | Takkt AG vs. Dave Busters Entertainment | Takkt AG vs. Perseus Mining Limited | Takkt AG vs. Beijing Media |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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