Correlation Between Microsoft and EMERGENT BIOSOLUT
Can any of the company-specific risk be diversified away by investing in both Microsoft and EMERGENT BIOSOLUT 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 EMERGENT BIOSOLUT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and EMERGENT BIOSOLUT, you can compare the effects of market volatilities on Microsoft and EMERGENT BIOSOLUT 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 EMERGENT BIOSOLUT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and EMERGENT BIOSOLUT.
Diversification Opportunities for Microsoft and EMERGENT BIOSOLUT
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and EMERGENT is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and EMERGENT BIOSOLUT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMERGENT BIOSOLUT 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 EMERGENT BIOSOLUT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMERGENT BIOSOLUT has no effect on the direction of Microsoft i.e., Microsoft and EMERGENT BIOSOLUT go up and down completely randomly.
Pair Corralation between Microsoft and EMERGENT BIOSOLUT
Given the investment horizon of 90 days Microsoft is expected to generate 80.76 times less return on investment than EMERGENT BIOSOLUT. But when comparing it to its historical volatility, Microsoft is 7.68 times less risky than EMERGENT BIOSOLUT. It trades about 0.01 of its potential returns per unit of risk. EMERGENT BIOSOLUT is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 602.00 in EMERGENT BIOSOLUT on September 3, 2024 and sell it today you would earn a total of 347.00 from holding EMERGENT BIOSOLUT or generate 57.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.9% |
| Values | Daily Returns |
Microsoft vs. EMERGENT BIOSOLUT
Performance |
| Timeline |
| Microsoft |
| EMERGENT BIOSOLUT |
Microsoft and EMERGENT BIOSOLUT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and EMERGENT BIOSOLUT
The main advantage of trading using opposite Microsoft and EMERGENT BIOSOLUT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, EMERGENT BIOSOLUT 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 EMERGENT BIOSOLUT will offset losses from the drop in EMERGENT BIOSOLUT's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| EMERGENT BIOSOLUT vs. LG Display Co | EMERGENT BIOSOLUT vs. ePlay Digital | EMERGENT BIOSOLUT vs. VIAPLAY GROUP AB | EMERGENT BIOSOLUT vs. CarsalesCom |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |