Correlation Between Microsoft and Emova Group
Can any of the company-specific risk be diversified away by investing in both Microsoft and Emova 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 Emova Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Emova Group SA, you can compare the effects of market volatilities on Microsoft and Emova 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 Emova Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Emova Group.
Diversification Opportunities for Microsoft and Emova Group
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Emova is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Emova Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emova Group SA 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 Emova Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emova Group SA has no effect on the direction of Microsoft i.e., Microsoft and Emova Group go up and down completely randomly.
Pair Corralation between Microsoft and Emova Group
Given the investment horizon of 90 days Microsoft is expected to under-perform the Emova Group. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.47 times less risky than Emova Group. The stock trades about -0.09 of its potential returns per unit of risk. The Emova Group SA is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 88.00 in Emova Group SA on November 30, 2024 and sell it today you would lose (4.00) from holding Emova Group SA or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 93.18% |
| Values | Daily Returns |
Microsoft vs. Emova Group SA
Performance |
| Timeline |
| Microsoft |
| Emova Group SA |
Microsoft and Emova Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Emova Group
The main advantage of trading using opposite Microsoft and Emova Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Emova 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 Emova Group will offset losses from the drop in Emova Group's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Emova Group vs. Claranova SE | Emova Group vs. Nextedia | Emova Group vs. Acheter Louer | Emova Group vs. Groupe Sfpi |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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