Correlation Between Microsoft and AEX Amsterdam
Can any of the company-specific risk be diversified away by investing in both Microsoft and AEX Amsterdam 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 AEX Amsterdam into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and AEX Amsterdam Index, you can compare the effects of market volatilities on Microsoft and AEX Amsterdam 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 AEX Amsterdam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and AEX Amsterdam.
Diversification Opportunities for Microsoft and AEX Amsterdam
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and AEX is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and AEX Amsterdam Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEX Amsterdam Index 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 AEX Amsterdam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEX Amsterdam Index has no effect on the direction of Microsoft i.e., Microsoft and AEX Amsterdam go up and down completely randomly.
Pair Corralation between Microsoft and AEX Amsterdam
Given the investment horizon of 90 days Microsoft is expected to generate 1.48 times more return on investment than AEX Amsterdam. However, Microsoft is 1.48 times more volatile than AEX Amsterdam Index. It trades about 0.02 of its potential returns per unit of risk. AEX Amsterdam Index is currently generating about -0.02 per unit of risk. If you would invest 41,195 in Microsoft on September 1, 2024 and sell it today you would earn a total of 1,151 from holding Microsoft or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.18% |
| Values | Daily Returns |
Microsoft vs. AEX Amsterdam Index
Performance |
| Timeline |
Microsoft and AEX Amsterdam Volatility Contrast
Predicted Return Density |
| Returns |
Microsoft
Pair trading matchups for Microsoft
AEX Amsterdam Index
Pair trading matchups for AEX Amsterdam
Pair Trading with Microsoft and AEX Amsterdam
The main advantage of trading using opposite Microsoft and AEX Amsterdam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, AEX Amsterdam 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 AEX Amsterdam will offset losses from the drop in AEX Amsterdam's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| AEX Amsterdam vs. Reinet Investments SCA | AEX Amsterdam vs. Universal Music Group | AEX Amsterdam vs. Allfunds Group | AEX Amsterdam vs. SBM Offshore NV |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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