Correlation Between Microsoft and 2G ENERGY
Can any of the company-specific risk be diversified away by investing in both Microsoft and 2G ENERGY 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 2G ENERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and 2G ENERGY , you can compare the effects of market volatilities on Microsoft and 2G ENERGY 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 2G ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and 2G ENERGY.
Diversification Opportunities for Microsoft and 2G ENERGY
Good diversification
The 3 months correlation between Microsoft and 2GB is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and 2G ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2G ENERGY 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 2G ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2G ENERGY has no effect on the direction of Microsoft i.e., Microsoft and 2G ENERGY go up and down completely randomly.
Pair Corralation between Microsoft and 2G ENERGY
Given the investment horizon of 90 days Microsoft is expected to generate 0.44 times more return on investment than 2G ENERGY. However, Microsoft is 2.29 times less risky than 2G ENERGY. It trades about -0.21 of its potential returns per unit of risk. 2G ENERGY is currently generating about -0.25 per unit of risk. If you would invest 41,416 in Microsoft on December 1, 2024 and sell it today you would lose (1,717) from holding Microsoft or give up 4.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Microsoft vs. 2G ENERGY
Performance |
| Timeline |
| Microsoft |
| 2G ENERGY |
Microsoft and 2G ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and 2G ENERGY
The main advantage of trading using opposite Microsoft and 2G ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, 2G ENERGY 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 2G ENERGY will offset losses from the drop in 2G ENERGY's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| 2G ENERGY vs. ELMOS SEMICONDUCTOR | 2G ENERGY vs. MagnaChip Semiconductor Corp | 2G ENERGY vs. Hua Hong Semiconductor | 2G ENERGY vs. ECHO INVESTMENT ZY |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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