Correlation Between Microsoft and Chiba Bank
Can any of the company-specific risk be diversified away by investing in both Microsoft and Chiba Bank 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 Chiba Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Chiba Bank Ltd, you can compare the effects of market volatilities on Microsoft and Chiba Bank 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 Chiba Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Chiba Bank.
Diversification Opportunities for Microsoft and Chiba Bank
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Chiba is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Chiba Bank Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chiba Bank 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 Chiba Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chiba Bank has no effect on the direction of Microsoft i.e., Microsoft and Chiba Bank go up and down completely randomly.
Pair Corralation between Microsoft and Chiba Bank
Given the investment horizon of 90 days Microsoft is expected to generate 0.42 times more return on investment than Chiba Bank. However, Microsoft is 2.36 times less risky than Chiba Bank. It trades about 0.08 of its potential returns per unit of risk. Chiba Bank Ltd is currently generating about 0.04 per unit of risk. If you would invest 24,042 in Microsoft on August 28, 2024 and sell it today you would earn a total of 17,837 from holding Microsoft or generate 74.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Chiba Bank Ltd
Performance |
| Timeline |
| Microsoft |
| Chiba Bank |
Microsoft and Chiba Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Chiba Bank
The main advantage of trading using opposite Microsoft and Chiba Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Chiba Bank 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 Chiba Bank will offset losses from the drop in Chiba Bank's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Chiba Bank vs. First Hawaiian | Chiba Bank vs. Central Pacific Financial | Chiba Bank vs. Territorial Bancorp | Chiba Bank vs. Comerica |
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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