Correlation Between Microsoft and Intercure
Can any of the company-specific risk be diversified away by investing in both Microsoft and Intercure 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 Intercure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Intercure, you can compare the effects of market volatilities on Microsoft and Intercure 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 Intercure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Intercure.
Diversification Opportunities for Microsoft and Intercure
Good diversification
The 3 months correlation between Microsoft and Intercure is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Intercure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intercure 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 Intercure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intercure has no effect on the direction of Microsoft i.e., Microsoft and Intercure go up and down completely randomly.
Pair Corralation between Microsoft and Intercure
Given the investment horizon of 90 days Microsoft is expected to generate 0.36 times more return on investment than Intercure. However, Microsoft is 2.76 times less risky than Intercure. It trades about 0.08 of its potential returns per unit of risk. Intercure is currently generating about -0.06 per unit of risk. If you would invest 24,616 in Microsoft on August 26, 2024 and sell it today you would earn a total of 17,084 from holding Microsoft or generate 69.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 77.87% |
| Values | Daily Returns |
Microsoft vs. Intercure
Performance |
| Timeline |
| Microsoft |
| Intercure |
Microsoft and Intercure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Intercure
The main advantage of trading using opposite Microsoft and Intercure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Intercure 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 Intercure will offset losses from the drop in Intercure's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Intercure vs. Together Startup Network | Intercure vs. Delek Group | Intercure vs. Teva Pharmaceutical Industries | Intercure vs. El Al Israel |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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