Correlation Between Microsoft and CEMEX SAB
Can any of the company-specific risk be diversified away by investing in both Microsoft and CEMEX SAB 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 CEMEX SAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and CEMEX SAB de, you can compare the effects of market volatilities on Microsoft and CEMEX SAB 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 CEMEX SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and CEMEX SAB.
Diversification Opportunities for Microsoft and CEMEX SAB
Average diversification
The 3 months correlation between Microsoft and CEMEX is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and CEMEX SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEMEX SAB de 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 CEMEX SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEMEX SAB de has no effect on the direction of Microsoft i.e., Microsoft and CEMEX SAB go up and down completely randomly.
Pair Corralation between Microsoft and CEMEX SAB
Given the investment horizon of 90 days Microsoft is expected to generate 0.63 times more return on investment than CEMEX SAB. However, Microsoft is 1.59 times less risky than CEMEX SAB. It trades about -0.04 of its potential returns per unit of risk. CEMEX SAB de is currently generating about -0.08 per unit of risk. If you would invest 43,167 in Microsoft on August 31, 2024 and sell it today you would lose (868.00) from holding Microsoft or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. CEMEX SAB de
Performance |
| Timeline |
| Microsoft |
| CEMEX SAB de |
Microsoft and CEMEX SAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and CEMEX SAB
The main advantage of trading using opposite Microsoft and CEMEX SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, CEMEX SAB 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 CEMEX SAB will offset losses from the drop in CEMEX SAB's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| CEMEX SAB vs. Vulcan Materials | CEMEX SAB vs. Martin Marietta Materials | CEMEX SAB vs. Eagle Materials | CEMEX SAB vs. CRH PLC ADR |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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