Correlation Between Microsoft and Atos SE
Can any of the company-specific risk be diversified away by investing in both Microsoft and Atos SE 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 Atos SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Atos SE, you can compare the effects of market volatilities on Microsoft and Atos SE 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 Atos SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Atos SE.
Diversification Opportunities for Microsoft and Atos SE
Very good diversification
The 3 months correlation between Microsoft and Atos is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Atos SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atos SE 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 Atos SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atos SE has no effect on the direction of Microsoft i.e., Microsoft and Atos SE go up and down completely randomly.
Pair Corralation between Microsoft and Atos SE
Given the investment horizon of 90 days Microsoft is expected to generate 80.74 times less return on investment than Atos SE. But when comparing it to its historical volatility, Microsoft is 63.02 times less risky than Atos SE. It trades about 0.05 of its potential returns per unit of risk. Atos SE is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 243.00 in Atos SE on September 24, 2024 and sell it today you would lose (242.79) from holding Atos SE or give up 99.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.65% |
| Values | Daily Returns |
Microsoft vs. Atos SE
Performance |
| Timeline |
| Microsoft |
| Atos SE |
Microsoft and Atos SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Atos SE
The main advantage of trading using opposite Microsoft and Atos SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Atos SE 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 Atos SE will offset losses from the drop in Atos SE's long position.| Microsoft vs. BlackBerry | Microsoft vs. Global Blue Group | Microsoft vs. Aurora Mobile | Microsoft vs. Marqeta |
| Atos SE vs. Accenture plc | Atos SE vs. International Business Machines | Atos SE vs. Infosys Limited | Atos SE vs. Cognizant Technology Solutions |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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