Correlation Between Microsoft and Ebusco Holding
Can any of the company-specific risk be diversified away by investing in both Microsoft and Ebusco Holding 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 Ebusco Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Ebusco Holding BV, you can compare the effects of market volatilities on Microsoft and Ebusco Holding 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 Ebusco Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Ebusco Holding.
Diversification Opportunities for Microsoft and Ebusco Holding
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Ebusco is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Ebusco Holding BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebusco Holding BV 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 Ebusco Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebusco Holding BV has no effect on the direction of Microsoft i.e., Microsoft and Ebusco Holding go up and down completely randomly.
Pair Corralation between Microsoft and Ebusco Holding
Given the investment horizon of 90 days Microsoft is expected to generate 0.08 times more return on investment than Ebusco Holding. However, Microsoft is 11.96 times less risky than Ebusco Holding. It trades about -0.04 of its potential returns per unit of risk. Ebusco Holding BV is currently generating about -0.05 per unit of risk. If you would invest 42,574 in Microsoft on August 28, 2024 and sell it today you would lose (695.00) from holding Microsoft or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Ebusco Holding BV
Performance |
| Timeline |
| Microsoft |
| Ebusco Holding BV |
Microsoft and Ebusco Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Ebusco Holding
The main advantage of trading using opposite Microsoft and Ebusco Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Ebusco Holding 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 Ebusco Holding will offset losses from the drop in Ebusco Holding'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 Valuation module to check real value of public entities based on technical and fundamental data.
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