Correlation Between Microsoft and Elekta AB
Can any of the company-specific risk be diversified away by investing in both Microsoft and Elekta AB 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 Elekta AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Elekta AB, you can compare the effects of market volatilities on Microsoft and Elekta AB 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 Elekta AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Elekta AB.
Diversification Opportunities for Microsoft and Elekta AB
Average diversification
The 3 months correlation between Microsoft and Elekta is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Elekta AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elekta AB 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 Elekta AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elekta AB has no effect on the direction of Microsoft i.e., Microsoft and Elekta AB go up and down completely randomly.
Pair Corralation between Microsoft and Elekta AB
Given the investment horizon of 90 days Microsoft is expected to generate 0.74 times more return on investment than Elekta AB. However, Microsoft is 1.35 times less risky than Elekta AB. It trades about 0.09 of its potential returns per unit of risk. Elekta AB is currently generating about 0.02 per unit of risk. If you would invest 24,146 in Microsoft on August 30, 2024 and sell it today you would earn a total of 18,153 from holding Microsoft or generate 75.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Microsoft vs. Elekta AB
Performance |
| Timeline |
| Microsoft |
| Elekta AB |
Microsoft and Elekta AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Elekta AB
The main advantage of trading using opposite Microsoft and Elekta AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Elekta AB 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 Elekta AB will offset losses from the drop in Elekta AB's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Elekta AB vs. Getinge AB ser | Elekta AB vs. AB SKF | Elekta AB vs. ASSA ABLOY AB | Elekta AB vs. Husqvarna AB |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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