Correlation Between Microsoft and Nien Made
Can any of the company-specific risk be diversified away by investing in both Microsoft and Nien Made 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 Nien Made into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Nien Made Enterprise, you can compare the effects of market volatilities on Microsoft and Nien Made 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 Nien Made. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Nien Made.
Diversification Opportunities for Microsoft and Nien Made
Average diversification
The 3 months correlation between Microsoft and Nien is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Nien Made Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nien Made Enterprise 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 Nien Made. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nien Made Enterprise has no effect on the direction of Microsoft i.e., Microsoft and Nien Made go up and down completely randomly.
Pair Corralation between Microsoft and Nien Made
Given the investment horizon of 90 days Microsoft is expected to generate 0.63 times more return on investment than Nien Made. However, Microsoft is 1.58 times less risky than Nien Made. It trades about -0.04 of its potential returns per unit of risk. Nien Made Enterprise is currently generating about -0.26 per unit of risk. If you would invest 43,167 in Microsoft on August 31, 2024 and sell it today you would lose (868.00) from holding Microsoft or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Microsoft vs. Nien Made Enterprise
Performance |
| Timeline |
| Microsoft |
| Nien Made Enterprise |
Microsoft and Nien Made Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Nien Made
The main advantage of trading using opposite Microsoft and Nien Made positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Nien Made 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 Nien Made will offset losses from the drop in Nien Made's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Nien Made vs. Feng Tay Enterprises | Nien Made vs. Chailease Holding Co | Nien Made vs. Eclat Textile Co | Nien Made vs. Giant Manufacturing 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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