Correlation Between Microsoft and Avanza Bank
Can any of the company-specific risk be diversified away by investing in both Microsoft and Avanza Bank 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 Avanza Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Avanza Bank Holding, you can compare the effects of market volatilities on Microsoft and Avanza Bank 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 Avanza Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Avanza Bank.
Diversification Opportunities for Microsoft and Avanza Bank
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Avanza is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Avanza Bank Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanza Bank Holding 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 Avanza Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanza Bank Holding has no effect on the direction of Microsoft i.e., Microsoft and Avanza Bank go up and down completely randomly.
Pair Corralation between Microsoft and Avanza Bank
Given the investment horizon of 90 days Microsoft is expected to generate 0.71 times more return on investment than Avanza Bank. However, Microsoft is 1.41 times less risky than Avanza Bank. It trades about 0.05 of its potential returns per unit of risk. Avanza Bank Holding is currently generating about 0.01 per unit of risk. If you would invest 33,207 in Microsoft on August 27, 2024 and sell it today you would earn a total of 8,493 from holding Microsoft or generate 25.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
Microsoft vs. Avanza Bank Holding
Performance |
| Timeline |
| Microsoft |
| Avanza Bank Holding |
Microsoft and Avanza Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Avanza Bank
The main advantage of trading using opposite Microsoft and Avanza Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Avanza Bank 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 Avanza Bank will offset losses from the drop in Avanza Bank's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Avanza Bank vs. Axfood AB | Avanza Bank vs. Samhllsbyggnadsbolaget i Norden | Avanza Bank vs. Castellum AB | Avanza Bank vs. Investor AB ser |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |