Correlation Between Microsoft and CochLear
Can any of the company-specific risk be diversified away by investing in both Microsoft and CochLear 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 CochLear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and CochLear Ltd ADR, you can compare the effects of market volatilities on Microsoft and CochLear 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 CochLear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and CochLear.
Diversification Opportunities for Microsoft and CochLear
Pay attention - limited upside
The 3 months correlation between Microsoft and CochLear is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and CochLear Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CochLear ADR 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 CochLear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CochLear ADR has no effect on the direction of Microsoft i.e., Microsoft and CochLear go up and down completely randomly.
Pair Corralation between Microsoft and CochLear
Given the investment horizon of 90 days Microsoft is expected to under-perform the CochLear. In addition to that, Microsoft is 1.2 times more volatile than CochLear Ltd ADR. It trades about -0.01 of its total potential returns per unit of risk. CochLear Ltd ADR is currently generating about 0.24 per unit of volatility. If you would invest 9,112 in CochLear Ltd ADR on November 3, 2024 and sell it today you would earn a total of 779.00 from holding CochLear Ltd ADR or generate 8.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. CochLear Ltd ADR
Performance |
| Timeline |
| Microsoft |
| CochLear ADR |
Microsoft and CochLear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and CochLear
The main advantage of trading using opposite Microsoft and CochLear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, CochLear 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 CochLear will offset losses from the drop in CochLear's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| CochLear vs. Smith Nephew SNATS | CochLear vs. Integer Holdings Corp | CochLear vs. Demant AS ADR | CochLear vs. GN Store Nord |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |