Correlation Between Microsoft and Elis SA
Can any of the company-specific risk be diversified away by investing in both Microsoft and Elis SA 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 Elis SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Elis SA, you can compare the effects of market volatilities on Microsoft and Elis SA 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 Elis SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Elis SA.
Diversification Opportunities for Microsoft and Elis SA
Very good diversification
The 3 months correlation between Microsoft and Elis is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Elis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elis SA 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 Elis SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elis SA has no effect on the direction of Microsoft i.e., Microsoft and Elis SA go up and down completely randomly.
Pair Corralation between Microsoft and Elis SA
Given the investment horizon of 90 days Microsoft is expected to under-perform the Elis SA. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.03 times less risky than Elis SA. The stock trades about -0.06 of its potential returns per unit of risk. The Elis SA is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 2,036 in Elis SA on August 26, 2024 and sell it today you would lose (39.00) from holding Elis SA or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Elis SA
Performance |
| Timeline |
| Microsoft |
| Elis SA |
Microsoft and Elis SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Elis SA
The main advantage of trading using opposite Microsoft and Elis SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Elis SA 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 Elis SA will offset losses from the drop in Elis SA's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Rapid7 Inc |
| Elis SA vs. Prodways Group SA | Elis SA vs. Claranova SE | Elis SA vs. DBV Technologies SA | Elis SA vs. Manitou BF 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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