Correlation Between Microsoft and Abraxas Petroleum
Can any of the company-specific risk be diversified away by investing in both Microsoft and Abraxas Petroleum 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 Abraxas Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Abraxas Petroleum, you can compare the effects of market volatilities on Microsoft and Abraxas Petroleum 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 Abraxas Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Abraxas Petroleum.
Diversification Opportunities for Microsoft and Abraxas Petroleum
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Abraxas is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Abraxas Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abraxas Petroleum 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 Abraxas Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abraxas Petroleum has no effect on the direction of Microsoft i.e., Microsoft and Abraxas Petroleum go up and down completely randomly.
Pair Corralation between Microsoft and Abraxas Petroleum
Given the investment horizon of 90 days Microsoft is expected to generate 20.66 times less return on investment than Abraxas Petroleum. But when comparing it to its historical volatility, Microsoft is 23.37 times less risky than Abraxas Petroleum. It trades about 0.08 of its potential returns per unit of risk. Abraxas Petroleum is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 99.00 in Abraxas Petroleum on September 3, 2024 and sell it today you would lose (95.53) from holding Abraxas Petroleum or give up 96.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 26.67% |
| Values | Daily Returns |
Microsoft vs. Abraxas Petroleum
Performance |
| Timeline |
| Microsoft |
| Abraxas Petroleum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Abraxas Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Abraxas Petroleum
The main advantage of trading using opposite Microsoft and Abraxas Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Abraxas Petroleum 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 Abraxas Petroleum will offset losses from the drop in Abraxas Petroleum's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Abraxas Petroleum vs. Tullow Oil plc | Abraxas Petroleum vs. Rockhopper Exploration plc | Abraxas Petroleum vs. Civitas Resources | Abraxas Petroleum vs. Civitas Resources |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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