Correlation Between Microsoft and Aker BP
Can any of the company-specific risk be diversified away by investing in both Microsoft and Aker BP 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 Aker BP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Aker BP ASA, you can compare the effects of market volatilities on Microsoft and Aker BP 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 Aker BP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Aker BP.
Diversification Opportunities for Microsoft and Aker BP
Excellent diversification
The 3 months correlation between Microsoft and Aker is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Aker BP ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker BP ASA 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 Aker BP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker BP ASA has no effect on the direction of Microsoft i.e., Microsoft and Aker BP go up and down completely randomly.
Pair Corralation between Microsoft and Aker BP
Given the investment horizon of 90 days Microsoft is expected to under-perform the Aker BP. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.06 times less risky than Aker BP. The stock trades about -0.33 of its potential returns per unit of risk. The Aker BP ASA is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 23,574 in Aker BP ASA on November 29, 2024 and sell it today you would lose (529.00) from holding Aker BP ASA or give up 2.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. Aker BP ASA
Performance |
| Timeline |
| Microsoft |
| Aker BP ASA |
Microsoft and Aker BP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Aker BP
The main advantage of trading using opposite Microsoft and Aker BP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Aker BP 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 Aker BP will offset losses from the drop in Aker BP's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Aker BP vs. AfriTin Mining | Aker BP vs. Heavitree Brewery | Aker BP vs. InterContinental Hotels Group | Aker BP vs. Martin Marietta Materials |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |