Correlation Between Microsoft and Omeros
Can any of the company-specific risk be diversified away by investing in both Microsoft and Omeros 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 Omeros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Omeros, you can compare the effects of market volatilities on Microsoft and Omeros 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 Omeros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Omeros.
Diversification Opportunities for Microsoft and Omeros
Significant diversification
The 3 months correlation between Microsoft and Omeros is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Omeros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omeros 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 Omeros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omeros has no effect on the direction of Microsoft i.e., Microsoft and Omeros go up and down completely randomly.
Pair Corralation between Microsoft and Omeros
Given the investment horizon of 90 days Microsoft is expected to generate 43.68 times less return on investment than Omeros. But when comparing it to its historical volatility, Microsoft is 6.02 times less risky than Omeros. It trades about 0.02 of its potential returns per unit of risk. Omeros is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 347.00 in Omeros on September 2, 2024 and sell it today you would earn a total of 706.00 from holding Omeros or generate 203.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.92% |
| Values | Daily Returns |
Microsoft vs. Omeros
Performance |
| Timeline |
| Microsoft |
| Omeros |
Microsoft and Omeros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Omeros
The main advantage of trading using opposite Microsoft and Omeros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Omeros 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 Omeros will offset losses from the drop in Omeros' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Omeros vs. INTERSHOP Communications Aktiengesellschaft | Omeros vs. Verizon Communications | Omeros vs. HEALTHCARE REAL A | Omeros vs. National Health Investors |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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