Correlation Between Microsoft and Boliden AB
Can any of the company-specific risk be diversified away by investing in both Microsoft and Boliden AB 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 Boliden AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Boliden AB, you can compare the effects of market volatilities on Microsoft and Boliden AB 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 Boliden AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Boliden AB.
Diversification Opportunities for Microsoft and Boliden AB
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Boliden is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Boliden AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boliden AB 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 Boliden AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boliden AB has no effect on the direction of Microsoft i.e., Microsoft and Boliden AB go up and down completely randomly.
Pair Corralation between Microsoft and Boliden AB
If you would invest 32,302 in Microsoft on September 1, 2024 and sell it today you would earn a total of 10,044 from holding Microsoft or generate 31.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 8.06% |
| Values | Daily Returns |
Microsoft vs. Boliden AB
Performance |
| Timeline |
| Microsoft |
| Boliden AB |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Boliden AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Boliden AB
The main advantage of trading using opposite Microsoft and Boliden AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Boliden AB 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 Boliden AB will offset losses from the drop in Boliden AB's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Boliden AB vs. Avarone Metals | Boliden AB vs. Aurelia Metals Limited | Boliden AB vs. Adriatic Metals PLC | Boliden AB vs. Huntsman Exploration |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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