Correlation Between Microsoft and Delek
Can any of the company-specific risk be diversified away by investing in both Microsoft and Delek 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 Delek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Delek Group, you can compare the effects of market volatilities on Microsoft and Delek 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 Delek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Delek.
Diversification Opportunities for Microsoft and Delek
Average diversification
The 3 months correlation between Microsoft and Delek is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Delek Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Group 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 Delek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Group has no effect on the direction of Microsoft i.e., Microsoft and Delek go up and down completely randomly.
Pair Corralation between Microsoft and Delek
Given the investment horizon of 90 days Microsoft is expected to under-perform the Delek. In addition to that, Microsoft is 1.01 times more volatile than Delek Group. It trades about -0.04 of its total potential returns per unit of risk. Delek Group is currently generating about 0.36 per unit of volatility. If you would invest 4,415,000 in Delek Group on August 28, 2024 and sell it today you would earn a total of 471,000 from holding Delek Group or generate 10.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 80.95% |
| Values | Daily Returns |
Microsoft vs. Delek Group
Performance |
| Timeline |
| Microsoft |
| Delek Group |
Microsoft and Delek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Delek
The main advantage of trading using opposite Microsoft and Delek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Delek 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 Delek will offset losses from the drop in Delek's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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