Correlation Between Microsoft and CS Real
Can any of the company-specific risk be diversified away by investing in both Microsoft and CS Real 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 CS Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and CS Real Estate, you can compare the effects of market volatilities on Microsoft and CS Real 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 CS Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and CS Real.
Diversification Opportunities for Microsoft and CS Real
Weak diversification
The 3 months correlation between Microsoft and CSLP is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and CS Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CS Real Estate 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 CS Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CS Real Estate has no effect on the direction of Microsoft i.e., Microsoft and CS Real go up and down completely randomly.
Pair Corralation between Microsoft and CS Real
Given the investment horizon of 90 days Microsoft is expected to generate 1.2 times more return on investment than CS Real. However, Microsoft is 1.2 times more volatile than CS Real Estate. It trades about 0.08 of its potential returns per unit of risk. CS Real Estate is currently generating about 0.08 per unit of risk. If you would invest 33,746 in Microsoft on September 19, 2024 and sell it today you would earn a total of 9,993 from holding Microsoft or generate 29.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.66% |
| Values | Daily Returns |
Microsoft vs. CS Real Estate
Performance |
| Timeline |
| Microsoft |
| CS Real Estate |
Microsoft and CS Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and CS Real
The main advantage of trading using opposite Microsoft and CS Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, CS Real 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 CS Real will offset losses from the drop in CS Real's long position.| Microsoft vs. Global Blue Group | Microsoft vs. Aurora Mobile | Microsoft vs. Marqeta | Microsoft vs. Nextnav Acquisition Corp |
| CS Real vs. SPDR Dow Jones | CS Real vs. Baloise Holding AG | CS Real vs. SPDR FTSE UK | CS Real vs. Banque Cantonale du |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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