Correlation Between Microsoft and Bavarian Nordic
Can any of the company-specific risk be diversified away by investing in both Microsoft and Bavarian Nordic 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 Bavarian Nordic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Bavarian Nordic AS, you can compare the effects of market volatilities on Microsoft and Bavarian Nordic 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 Bavarian Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Bavarian Nordic.
Diversification Opportunities for Microsoft and Bavarian Nordic
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Bavarian is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Bavarian Nordic AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bavarian Nordic 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 Bavarian Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bavarian Nordic AS has no effect on the direction of Microsoft i.e., Microsoft and Bavarian Nordic go up and down completely randomly.
Pair Corralation between Microsoft and Bavarian Nordic
Given the investment horizon of 90 days Microsoft is expected to generate 1.44 times less return on investment than Bavarian Nordic. But when comparing it to its historical volatility, Microsoft is 3.01 times less risky than Bavarian Nordic. It trades about 0.06 of its potential returns per unit of risk. Bavarian Nordic AS is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 824.00 in Bavarian Nordic AS on September 4, 2024 and sell it today you would earn a total of 80.00 from holding Bavarian Nordic AS or generate 9.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Microsoft vs. Bavarian Nordic AS
Performance |
| Timeline |
| Microsoft |
| Bavarian Nordic AS |
Microsoft and Bavarian Nordic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Bavarian Nordic
The main advantage of trading using opposite Microsoft and Bavarian Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Bavarian Nordic 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 Bavarian Nordic will offset losses from the drop in Bavarian Nordic's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Bavarian Nordic vs. Mineralys Therapeutics, Common | Bavarian Nordic vs. Anebulo Pharmaceuticals | Bavarian Nordic vs. Bioatla | Bavarian Nordic vs. Bicycle Therapeutics |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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