Correlation Between Microsoft and Benefit Systems
Can any of the company-specific risk be diversified away by investing in both Microsoft and Benefit Systems 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 Benefit Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Benefit Systems SA, you can compare the effects of market volatilities on Microsoft and Benefit Systems 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 Benefit Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Benefit Systems.
Diversification Opportunities for Microsoft and Benefit Systems
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Benefit is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Benefit Systems SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benefit Systems SA 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 Benefit Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benefit Systems SA has no effect on the direction of Microsoft i.e., Microsoft and Benefit Systems go up and down completely randomly.
Pair Corralation between Microsoft and Benefit Systems
Given the investment horizon of 90 days Microsoft is expected to generate 0.64 times more return on investment than Benefit Systems. However, Microsoft is 1.57 times less risky than Benefit Systems. It trades about 0.02 of its potential returns per unit of risk. Benefit Systems SA is currently generating about -0.02 per unit of risk. If you would invest 41,195 in Microsoft on September 1, 2024 and sell it today you would earn a total of 1,151 from holding Microsoft or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Microsoft vs. Benefit Systems SA
Performance |
| Timeline |
| Microsoft |
| Benefit Systems SA |
Microsoft and Benefit Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Benefit Systems
The main advantage of trading using opposite Microsoft and Benefit Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Benefit Systems 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 Benefit Systems will offset losses from the drop in Benefit Systems' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Benefit Systems vs. Banco Santander SA | Benefit Systems vs. UniCredit SpA | Benefit Systems vs. CEZ as | Benefit Systems vs. Polski Koncern Naftowy |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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