Correlation Between Microsoft and Encore Medical
Can any of the company-specific risk be diversified away by investing in both Microsoft and Encore Medical 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 Encore Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Encore Medical Corp, you can compare the effects of market volatilities on Microsoft and Encore Medical 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 Encore Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Encore Medical.
Diversification Opportunities for Microsoft and Encore Medical
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microsoft and Encore is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Encore Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encore Medical Corp 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 Encore Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encore Medical Corp has no effect on the direction of Microsoft i.e., Microsoft and Encore Medical go up and down completely randomly.
Pair Corralation between Microsoft and Encore Medical
If you would invest 41,493 in Microsoft on September 19, 2024 and sell it today you would earn a total of 3,953 from holding Microsoft or generate 9.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Microsoft vs. Encore Medical Corp
Performance |
| Timeline |
| Microsoft |
| Encore Medical Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Encore Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Encore Medical
The main advantage of trading using opposite Microsoft and Encore Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Encore Medical 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 Encore Medical will offset losses from the drop in Encore Medical's long position.| Microsoft vs. Global Blue Group | Microsoft vs. Aurora Mobile | Microsoft vs. Marqeta | Microsoft vs. Nextnav Acquisition Corp |
| Encore Medical vs. Ross Stores | Encore Medical vs. JetBlue Airways Corp | Encore Medical vs. Sun Country Airlines | Encore Medical vs. Aegean Airlines 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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