Correlation Between Microsoft and BES Engineering
Can any of the company-specific risk be diversified away by investing in both Microsoft and BES Engineering 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 BES Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and BES Engineering Co, you can compare the effects of market volatilities on Microsoft and BES Engineering 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 BES Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and BES Engineering.
Diversification Opportunities for Microsoft and BES Engineering
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and BES is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and BES Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BES Engineering 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 BES Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BES Engineering has no effect on the direction of Microsoft i.e., Microsoft and BES Engineering go up and down completely randomly.
Pair Corralation between Microsoft and BES Engineering
Given the investment horizon of 90 days Microsoft is expected to generate 0.68 times more return on investment than BES Engineering. However, Microsoft is 1.47 times less risky than BES Engineering. It trades about 0.08 of its potential returns per unit of risk. BES Engineering Co is currently generating about -0.08 per unit of risk. If you would invest 43,811 in Microsoft on October 26, 2024 and sell it today you would earn a total of 860.00 from holding Microsoft or generate 1.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Microsoft vs. BES Engineering Co
Performance |
| Timeline |
| Microsoft |
| BES Engineering |
Microsoft and BES Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and BES Engineering
The main advantage of trading using opposite Microsoft and BES Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, BES Engineering 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 BES Engineering will offset losses from the drop in BES Engineering's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. BLOCK INC | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| BES Engineering vs. Hung Sheng Construction | BES Engineering vs. Taiwan Glass Ind | BES Engineering vs. China Petrochemical Development | BES Engineering vs. Taiwan Tea Corp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |