Correlation Between Microsoft and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both Microsoft and Xtrackers MSCI 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 Xtrackers MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Xtrackers MSCI Europe, you can compare the effects of market volatilities on Microsoft and Xtrackers MSCI 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 Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Xtrackers MSCI.
Diversification Opportunities for Microsoft and Xtrackers MSCI
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Xtrackers is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Xtrackers MSCI Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI Europe 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 Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI Europe has no effect on the direction of Microsoft i.e., Microsoft and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between Microsoft and Xtrackers MSCI
Given the investment horizon of 90 days Microsoft is expected to generate 1.96 times more return on investment than Xtrackers MSCI. However, Microsoft is 1.96 times more volatile than Xtrackers MSCI Europe. It trades about 0.19 of its potential returns per unit of risk. Xtrackers MSCI Europe is currently generating about 0.05 per unit of risk. If you would invest 40,554 in Microsoft on September 1, 2024 and sell it today you would earn a total of 1,792 from holding Microsoft or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. Xtrackers MSCI Europe
Performance |
| Timeline |
| Microsoft |
| Xtrackers MSCI Europe |
Microsoft and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Xtrackers MSCI
The main advantage of trading using opposite Microsoft and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Xtrackers MSCI 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 Xtrackers MSCI will offset losses from the drop in Xtrackers MSCI's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Xtrackers MSCI vs. Xtrackers MSCI Japan | Xtrackers MSCI vs. iShares Currency Hedged | Xtrackers MSCI vs. Xtrackers MSCI EAFE | Xtrackers MSCI vs. WisdomTree Europe Hedged |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |