Correlation Between Microsoft and ASOS Plc
Can any of the company-specific risk be diversified away by investing in both Microsoft and ASOS Plc 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 ASOS Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and ASOS Plc, you can compare the effects of market volatilities on Microsoft and ASOS Plc 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 ASOS Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and ASOS Plc.
Diversification Opportunities for Microsoft and ASOS Plc
Good diversification
The 3 months correlation between Microsoft and ASOS is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and ASOS Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASOS Plc 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 ASOS Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASOS Plc has no effect on the direction of Microsoft i.e., Microsoft and ASOS Plc go up and down completely randomly.
Pair Corralation between Microsoft and ASOS Plc
If you would invest 40,554 in Microsoft on September 1, 2024 and sell it today you would earn a total of 1,792 from holding Microsoft or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. ASOS Plc
Performance |
| Timeline |
| Microsoft |
| ASOS Plc |
Microsoft and ASOS Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and ASOS Plc
The main advantage of trading using opposite Microsoft and ASOS Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, ASOS Plc 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 ASOS Plc will offset losses from the drop in ASOS Plc's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| ASOS Plc vs. BoohooCom PLC ADR | ASOS Plc vs. Allegroeu SA | ASOS Plc vs. ZALANDO SE ADR | ASOS Plc vs. AKA Brands Holding |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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