Correlation Between Microsoft and Airbus Group
Can any of the company-specific risk be diversified away by investing in both Microsoft and Airbus Group 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 Airbus Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Airbus Group SE, you can compare the effects of market volatilities on Microsoft and Airbus Group 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 Airbus Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Airbus Group.
Diversification Opportunities for Microsoft and Airbus Group
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Airbus is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Airbus Group SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus Group SE 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 Airbus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus Group SE has no effect on the direction of Microsoft i.e., Microsoft and Airbus Group go up and down completely randomly.
Pair Corralation between Microsoft and Airbus Group
Given the investment horizon of 90 days Microsoft is expected to under-perform the Airbus Group. In addition to that, Microsoft is 1.31 times more volatile than Airbus Group SE. It trades about -0.04 of its total potential returns per unit of risk. Airbus Group SE is currently generating about -0.02 per unit of volatility. If you would invest 14,034 in Airbus Group SE on August 30, 2024 and sell it today you would lose (96.00) from holding Airbus Group SE or give up 0.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Airbus Group SE
Performance |
| Timeline |
| Microsoft |
| Airbus Group SE |
Microsoft and Airbus Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Airbus Group
The main advantage of trading using opposite Microsoft and Airbus Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Airbus Group 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 Airbus Group will offset losses from the drop in Airbus Group's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Airbus Group vs. Safran SA | Airbus Group vs. LVMH Mot Hennessy | Airbus Group vs. BNP Paribas SA | Airbus Group vs. Air France KLM SA |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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