Correlation Between Microsoft and AMAG Austria
Can any of the company-specific risk be diversified away by investing in both Microsoft and AMAG Austria 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 AMAG Austria into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and AMAG Austria Metall, you can compare the effects of market volatilities on Microsoft and AMAG Austria 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 AMAG Austria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and AMAG Austria.
Diversification Opportunities for Microsoft and AMAG Austria
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and AMAG is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and AMAG Austria Metall in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMAG Austria Metall 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 AMAG Austria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMAG Austria Metall has no effect on the direction of Microsoft i.e., Microsoft and AMAG Austria go up and down completely randomly.
Pair Corralation between Microsoft and AMAG Austria
Given the investment horizon of 90 days Microsoft is expected to generate 1.15 times less return on investment than AMAG Austria. But when comparing it to its historical volatility, Microsoft is 1.89 times less risky than AMAG Austria. It trades about 0.19 of its potential returns per unit of risk. AMAG Austria Metall is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,270 in AMAG Austria Metall on September 25, 2024 and sell it today you would earn a total of 120.00 from holding AMAG Austria Metall or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. AMAG Austria Metall
Performance |
| Timeline |
| Microsoft |
| AMAG Austria Metall |
Microsoft and AMAG Austria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and AMAG Austria
The main advantage of trading using opposite Microsoft and AMAG Austria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, AMAG Austria 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 AMAG Austria will offset losses from the drop in AMAG Austria's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| AMAG Austria vs. Norsk Hydro ASA | AMAG Austria vs. Norsk Hydro ASA | AMAG Austria vs. Alcoa Corp | AMAG Austria vs. Kaiser Aluminum |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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