Correlation Between Microsoft and Bourse Direct
Can any of the company-specific risk be diversified away by investing in both Microsoft and Bourse Direct 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 Bourse Direct into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Bourse Direct SA, you can compare the effects of market volatilities on Microsoft and Bourse Direct 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 Bourse Direct. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Bourse Direct.
Diversification Opportunities for Microsoft and Bourse Direct
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Bourse is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Bourse Direct SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bourse Direct 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 Bourse Direct. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bourse Direct SA has no effect on the direction of Microsoft i.e., Microsoft and Bourse Direct go up and down completely randomly.
Pair Corralation between Microsoft and Bourse Direct
Given the investment horizon of 90 days Microsoft is expected to generate 0.83 times more return on investment than Bourse Direct. However, Microsoft is 1.2 times less risky than Bourse Direct. It trades about -0.06 of its potential returns per unit of risk. Bourse Direct SA is currently generating about -0.09 per unit of risk. If you would invest 42,729 in Microsoft on August 26, 2024 and sell it today you would lose (1,029) from holding Microsoft or give up 2.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Bourse Direct SA
Performance |
| Timeline |
| Microsoft |
| Bourse Direct SA |
Microsoft and Bourse Direct Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Bourse Direct
The main advantage of trading using opposite Microsoft and Bourse Direct positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Bourse Direct 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 Bourse Direct will offset losses from the drop in Bourse Direct's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Bourse Direct vs. Stef SA | Bourse Direct vs. NRJ Group | Bourse Direct vs. Savencia SA | Bourse Direct vs. ABC arbitrage SA |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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