Correlation Between Microsoft and Shinhan WTI
Can any of the company-specific risk be diversified away by investing in both Microsoft and Shinhan WTI 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 Shinhan WTI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Shinhan WTI Futures, you can compare the effects of market volatilities on Microsoft and Shinhan WTI 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 Shinhan WTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Shinhan WTI.
Diversification Opportunities for Microsoft and Shinhan WTI
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Shinhan is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Shinhan WTI Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan WTI Futures 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 Shinhan WTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan WTI Futures has no effect on the direction of Microsoft i.e., Microsoft and Shinhan WTI go up and down completely randomly.
Pair Corralation between Microsoft and Shinhan WTI
Given the investment horizon of 90 days Microsoft is expected to under-perform the Shinhan WTI. In addition to that, Microsoft is 1.21 times more volatile than Shinhan WTI Futures. It trades about -0.04 of its total potential returns per unit of risk. Shinhan WTI Futures is currently generating about 0.06 per unit of volatility. If you would invest 770,000 in Shinhan WTI Futures on November 4, 2024 and sell it today you would earn a total of 13,500 from holding Shinhan WTI Futures or generate 1.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Microsoft vs. Shinhan WTI Futures
Performance |
| Timeline |
| Microsoft |
| Shinhan WTI Futures |
Microsoft and Shinhan WTI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Shinhan WTI
The main advantage of trading using opposite Microsoft and Shinhan WTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Shinhan WTI 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 Shinhan WTI will offset losses from the drop in Shinhan WTI's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Shinhan WTI vs. DB Financial Investment | Shinhan WTI vs. Hyundai Industrial Co | Shinhan WTI vs. PJ Metal Co | Shinhan WTI vs. Formetal Co |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |