Correlation Between Microsoft and Bactiquant
Can any of the company-specific risk be diversified away by investing in both Microsoft and Bactiquant 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 Bactiquant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Bactiquant AS, you can compare the effects of market volatilities on Microsoft and Bactiquant 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 Bactiquant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Bactiquant.
Diversification Opportunities for Microsoft and Bactiquant
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Bactiquant is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Bactiquant AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bactiquant AS 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 Bactiquant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bactiquant AS has no effect on the direction of Microsoft i.e., Microsoft and Bactiquant go up and down completely randomly.
Pair Corralation between Microsoft and Bactiquant
Given the investment horizon of 90 days Microsoft is expected to generate 0.28 times more return on investment than Bactiquant. However, Microsoft is 3.55 times less risky than Bactiquant. It trades about 0.19 of its potential returns per unit of risk. Bactiquant AS is currently generating about -0.1 per unit of risk. If you would invest 40,554 in Microsoft on September 1, 2024 and sell it today you would earn a total of 1,792 from holding Microsoft or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. Bactiquant AS
Performance |
| Timeline |
| Microsoft |
| Bactiquant AS |
Microsoft and Bactiquant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Bactiquant
The main advantage of trading using opposite Microsoft and Bactiquant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Bactiquant 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 Bactiquant will offset losses from the drop in Bactiquant's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Bactiquant vs. Sparinvest INDEX Globale | Bactiquant vs. Bavarian Nordic | Bactiquant vs. Investeringsselskabet Luxor AS | Bactiquant vs. cBrain AS |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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