Correlation Between Microsoft and AudioCodes
Can any of the company-specific risk be diversified away by investing in both Microsoft and AudioCodes 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 AudioCodes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and AudioCodes, you can compare the effects of market volatilities on Microsoft and AudioCodes 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 AudioCodes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and AudioCodes.
Diversification Opportunities for Microsoft and AudioCodes
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and AudioCodes is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and AudioCodes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AudioCodes 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 AudioCodes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AudioCodes has no effect on the direction of Microsoft i.e., Microsoft and AudioCodes go up and down completely randomly.
Pair Corralation between Microsoft and AudioCodes
Given the investment horizon of 90 days Microsoft is expected to generate 0.49 times more return on investment than AudioCodes. However, Microsoft is 2.03 times less risky than AudioCodes. It trades about 0.02 of its potential returns per unit of risk. AudioCodes is currently generating about -0.05 per unit of risk. If you would invest 42,574 in Microsoft on August 29, 2024 and sell it today you would earn a total of 225.00 from holding Microsoft or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 81.82% |
| Values | Daily Returns |
Microsoft vs. AudioCodes
Performance |
| Timeline |
| Microsoft |
| AudioCodes |
Microsoft and AudioCodes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and AudioCodes
The main advantage of trading using opposite Microsoft and AudioCodes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, AudioCodes 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 AudioCodes will offset losses from the drop in AudioCodes' long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| AudioCodes vs. Nice | AudioCodes vs. Tower Semiconductor | AudioCodes vs. Elbit Systems | AudioCodes vs. Nova |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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