Correlation Between Microsoft and Barings Global
Can any of the company-specific risk be diversified away by investing in both Microsoft and Barings Global 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 Barings Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Barings Global Credit, you can compare the effects of market volatilities on Microsoft and Barings Global 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 Barings Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Barings Global.
Diversification Opportunities for Microsoft and Barings Global
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Barings is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Barings Global Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Global Credit 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 Barings Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Global Credit has no effect on the direction of Microsoft i.e., Microsoft and Barings Global go up and down completely randomly.
Pair Corralation between Microsoft and Barings Global
Given the investment horizon of 90 days Microsoft is expected to generate 6.94 times more return on investment than Barings Global. However, Microsoft is 6.94 times more volatile than Barings Global Credit. It trades about 0.05 of its potential returns per unit of risk. Barings Global Credit is currently generating about 0.22 per unit of risk. If you would invest 36,820 in Microsoft on September 2, 2024 and sell it today you would earn a total of 5,526 from holding Microsoft or generate 15.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Barings Global Credit
Performance |
| Timeline |
| Microsoft |
| Barings Global Credit |
Microsoft and Barings Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Barings Global
The main advantage of trading using opposite Microsoft and Barings Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Barings Global 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 Barings Global will offset losses from the drop in Barings Global's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Barings Global vs. Barings Active Short | Barings Global vs. Barings Emerging Markets | Barings Global vs. Barings Emerging Markets | Barings Global vs. Barings Active Short |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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