Correlation Between Microsoft and Electro Ao
Can any of the company-specific risk be diversified away by investing in both Microsoft and Electro Ao 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 Electro Ao into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Electro Ao Altona, you can compare the effects of market volatilities on Microsoft and Electro Ao 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 Electro Ao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Electro Ao.
Diversification Opportunities for Microsoft and Electro Ao
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Electro is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Electro Ao Altona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electro Ao Altona 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 Electro Ao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electro Ao Altona has no effect on the direction of Microsoft i.e., Microsoft and Electro Ao go up and down completely randomly.
Pair Corralation between Microsoft and Electro Ao
Given the investment horizon of 90 days Microsoft is expected to under-perform the Electro Ao. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.5 times less risky than Electro Ao. The stock trades about -0.04 of its potential returns per unit of risk. The Electro Ao Altona is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,309 in Electro Ao Altona on August 31, 2024 and sell it today you would earn a total of 116.00 from holding Electro Ao Altona or generate 8.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Microsoft vs. Electro Ao Altona
Performance |
| Timeline |
| Microsoft |
| Electro Ao Altona |
Microsoft and Electro Ao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Electro Ao
The main advantage of trading using opposite Microsoft and Electro Ao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Electro Ao 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 Electro Ao will offset losses from the drop in Electro Ao's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Electro Ao vs. Companhia Siderrgica Nacional | Electro Ao vs. Usinas Siderrgicas de | Electro Ao vs. Companhia Energtica de | Electro Ao vs. Cosan SA |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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