Correlation Between Microsoft and HEXPOL AB
Can any of the company-specific risk be diversified away by investing in both Microsoft and HEXPOL 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 HEXPOL AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and HEXPOL AB, you can compare the effects of market volatilities on Microsoft and HEXPOL 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 HEXPOL AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and HEXPOL AB.
Diversification Opportunities for Microsoft and HEXPOL AB
Good diversification
The 3 months correlation between Microsoft and HEXPOL is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and HEXPOL AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEXPOL 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 HEXPOL AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEXPOL AB has no effect on the direction of Microsoft i.e., Microsoft and HEXPOL AB go up and down completely randomly.
Pair Corralation between Microsoft and HEXPOL AB
Given the investment horizon of 90 days Microsoft is expected to generate 0.76 times more return on investment than HEXPOL AB. However, Microsoft is 1.31 times less risky than HEXPOL AB. It trades about 0.03 of its potential returns per unit of risk. HEXPOL AB is currently generating about -0.04 per unit of risk. If you would invest 40,978 in Microsoft on August 28, 2024 and sell it today you would earn a total of 901.00 from holding Microsoft or generate 2.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Microsoft vs. HEXPOL AB
Performance |
| Timeline |
| Microsoft |
| HEXPOL AB |
Microsoft and HEXPOL AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and HEXPOL AB
The main advantage of trading using opposite Microsoft and HEXPOL AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, HEXPOL 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 HEXPOL AB will offset losses from the drop in HEXPOL AB's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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