Correlation Between Microsoft and ITM Power
Can any of the company-specific risk be diversified away by investing in both Microsoft and ITM Power 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 ITM Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and ITM Power Plc, you can compare the effects of market volatilities on Microsoft and ITM Power 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 ITM Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and ITM Power.
Diversification Opportunities for Microsoft and ITM Power
Good diversification
The 3 months correlation between Microsoft and ITM is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and ITM Power Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Power Plc 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 ITM Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Power Plc has no effect on the direction of Microsoft i.e., Microsoft and ITM Power go up and down completely randomly.
Pair Corralation between Microsoft and ITM Power
Given the investment horizon of 90 days Microsoft is expected to generate 0.21 times more return on investment than ITM Power. However, Microsoft is 4.74 times less risky than ITM Power. It trades about 0.19 of its potential returns per unit of risk. ITM Power Plc is currently generating about -0.12 per unit of risk. If you would invest 40,554 in Microsoft on September 1, 2024 and sell it today you would earn a total of 1,792 from holding Microsoft or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Microsoft vs. ITM Power Plc
Performance |
| Timeline |
| Microsoft |
| ITM Power Plc |
Microsoft and ITM Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and ITM Power
The main advantage of trading using opposite Microsoft and ITM Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, ITM Power 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 ITM Power will offset losses from the drop in ITM Power's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| ITM Power vs. Nel ASA | ITM Power vs. Powercell Sweden | ITM Power vs. Ballard Power Systems | ITM Power vs. Plug Power |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |