Correlation Between Microsoft and Augwind Energy
Can any of the company-specific risk be diversified away by investing in both Microsoft and Augwind Energy 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 Augwind Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Augwind Energy Tech, you can compare the effects of market volatilities on Microsoft and Augwind Energy 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 Augwind Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Augwind Energy.
Diversification Opportunities for Microsoft and Augwind Energy
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Augwind is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Augwind Energy Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Augwind Energy Tech 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 Augwind Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Augwind Energy Tech has no effect on the direction of Microsoft i.e., Microsoft and Augwind Energy go up and down completely randomly.
Pair Corralation between Microsoft and Augwind Energy
Given the investment horizon of 90 days Microsoft is expected to generate 44.74 times less return on investment than Augwind Energy. But when comparing it to its historical volatility, Microsoft is 5.06 times less risky than Augwind Energy. It trades about 0.02 of its potential returns per unit of risk. Augwind Energy Tech is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 21,170 in Augwind Energy Tech on September 1, 2024 and sell it today you would earn a total of 42,440 from holding Augwind Energy Tech or generate 200.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.19% |
| Values | Daily Returns |
Microsoft vs. Augwind Energy Tech
Performance |
| Timeline |
| Microsoft |
| Augwind Energy Tech |
Microsoft and Augwind Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Augwind Energy
The main advantage of trading using opposite Microsoft and Augwind Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Augwind Energy 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 Augwind Energy will offset losses from the drop in Augwind Energy's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Augwind Energy vs. Hiron Trade Investments Industrial | Augwind Energy vs. Retailors | Augwind Energy vs. Mobile Max M | Augwind Energy vs. Rimon Consulting Management |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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