Correlation Between Microsoft and Emerald Banking
Can any of the company-specific risk be diversified away by investing in both Microsoft and Emerald Banking 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 Emerald Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Emerald Banking And, you can compare the effects of market volatilities on Microsoft and Emerald Banking 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 Emerald Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Emerald Banking.
Diversification Opportunities for Microsoft and Emerald Banking
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Emerald is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Emerald Banking And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Banking And 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 Emerald Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Banking And has no effect on the direction of Microsoft i.e., Microsoft and Emerald Banking go up and down completely randomly.
Pair Corralation between Microsoft and Emerald Banking
Given the investment horizon of 90 days Microsoft is expected to under-perform the Emerald Banking. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.6 times less risky than Emerald Banking. The stock trades about -0.04 of its potential returns per unit of risk. The Emerald Banking And is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,739 in Emerald Banking And on August 25, 2024 and sell it today you would earn a total of 339.00 from holding Emerald Banking And or generate 12.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Emerald Banking And
Performance |
| Timeline |
| Microsoft |
| Emerald Banking And |
Microsoft and Emerald Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Emerald Banking
The main advantage of trading using opposite Microsoft and Emerald Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Emerald Banking 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 Emerald Banking will offset losses from the drop in Emerald Banking's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Emerald Banking vs. Emerald Banking And | Emerald Banking vs. Emerald Banking And | Emerald Banking vs. Emerald Banking And | Emerald Banking vs. Emerald Growth Fund |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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