Correlation Between Microsoft and Digitalist Group
Can any of the company-specific risk be diversified away by investing in both Microsoft and Digitalist Group 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 Digitalist Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Digitalist Group Oyj, you can compare the effects of market volatilities on Microsoft and Digitalist Group 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 Digitalist Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Digitalist Group.
Diversification Opportunities for Microsoft and Digitalist Group
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and Digitalist is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Digitalist Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digitalist Group Oyj 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 Digitalist Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digitalist Group Oyj has no effect on the direction of Microsoft i.e., Microsoft and Digitalist Group go up and down completely randomly.
Pair Corralation between Microsoft and Digitalist Group
Given the investment horizon of 90 days Microsoft is expected to under-perform the Digitalist Group. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.88 times less risky than Digitalist Group. The stock trades about -0.06 of its potential returns per unit of risk. The Digitalist Group Oyj is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1.58 in Digitalist Group Oyj on August 24, 2024 and sell it today you would earn a total of 0.28 from holding Digitalist Group Oyj or generate 17.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Digitalist Group Oyj
Performance |
| Timeline |
| Microsoft |
| Digitalist Group Oyj |
Microsoft and Digitalist Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Digitalist Group
The main advantage of trading using opposite Microsoft and Digitalist Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Digitalist Group 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 Digitalist Group will offset losses from the drop in Digitalist Group's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Digitalist Group vs. Tulikivi Oyj A | Digitalist Group vs. Afarak Group Oyj | Digitalist Group vs. Tecnotree Oyj | Digitalist Group vs. Solteq PLC |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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