Correlation Between Microsoft and Banco BTG
Can any of the company-specific risk be diversified away by investing in both Microsoft and Banco BTG 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 Banco BTG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Banco BTG Pactual, you can compare the effects of market volatilities on Microsoft and Banco BTG 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 Banco BTG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Banco BTG.
Diversification Opportunities for Microsoft and Banco BTG
Good diversification
The 3 months correlation between Microsoft and Banco is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Banco BTG Pactual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco BTG Pactual 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 Banco BTG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco BTG Pactual has no effect on the direction of Microsoft i.e., Microsoft and Banco BTG go up and down completely randomly.
Pair Corralation between Microsoft and Banco BTG
Given the investment horizon of 90 days Microsoft is expected to under-perform the Banco BTG. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.45 times less risky than Banco BTG. The stock trades about -0.01 of its potential returns per unit of risk. The Banco BTG Pactual is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,550 in Banco BTG Pactual on August 27, 2024 and sell it today you would earn a total of 34.00 from holding Banco BTG Pactual or generate 2.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.82% |
| Values | Daily Returns |
Microsoft vs. Banco BTG Pactual
Performance |
| Timeline |
| Microsoft |
| Banco BTG Pactual |
Microsoft and Banco BTG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Banco BTG
The main advantage of trading using opposite Microsoft and Banco BTG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Banco BTG 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 Banco BTG will offset losses from the drop in Banco BTG's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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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