Correlation Between Microsoft and Engie Energia
Can any of the company-specific risk be diversified away by investing in both Microsoft and Engie Energia 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 Engie Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Engie Energia Chile, you can compare the effects of market volatilities on Microsoft and Engie Energia 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 Engie Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Engie Energia.
Diversification Opportunities for Microsoft and Engie Energia
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Engie is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Engie Energia Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie Energia Chile 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 Engie Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie Energia Chile has no effect on the direction of Microsoft i.e., Microsoft and Engie Energia go up and down completely randomly.
Pair Corralation between Microsoft and Engie Energia
Given the investment horizon of 90 days Microsoft is expected to under-perform the Engie Energia. In addition to that, Microsoft is 1.2 times more volatile than Engie Energia Chile. It trades about -0.21 of its total potential returns per unit of risk. Engie Energia Chile is currently generating about 0.04 per unit of volatility. If you would invest 98,400 in Engie Energia Chile on January 5, 2025 and sell it today you would earn a total of 1,600 from holding Engie Energia Chile or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.56% |
| Values | Daily Returns |
Microsoft vs. Engie Energia Chile
Performance |
| Timeline |
| Microsoft |
| Engie Energia Chile |
Microsoft and Engie Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Engie Energia
The main advantage of trading using opposite Microsoft and Engie Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Engie Energia 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 Engie Energia will offset losses from the drop in Engie Energia's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Engie Energia vs. Colbun | Engie Energia vs. Enel Chile SA | Engie Energia vs. CAP SA | Engie Energia vs. Enel Amricas 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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