Correlation Between Microsoft and Infinity Bank
Can any of the company-specific risk be diversified away by investing in both Microsoft and Infinity Bank 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 Infinity Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Infinity Bank, you can compare the effects of market volatilities on Microsoft and Infinity Bank 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 Infinity Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Infinity Bank.
Diversification Opportunities for Microsoft and Infinity Bank
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Infinity is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Infinity Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infinity Bank 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 Infinity Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infinity Bank has no effect on the direction of Microsoft i.e., Microsoft and Infinity Bank go up and down completely randomly.
Pair Corralation between Microsoft and Infinity Bank
Given the investment horizon of 90 days Microsoft is expected to generate 1.21 times more return on investment than Infinity Bank. However, Microsoft is 1.21 times more volatile than Infinity Bank. It trades about 0.19 of its potential returns per unit of risk. Infinity Bank is currently generating about 0.18 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 | 100.0% |
| Values | Daily Returns |
Microsoft vs. Infinity Bank
Performance |
| Timeline |
| Microsoft |
| Infinity Bank |
Microsoft and Infinity Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Infinity Bank
The main advantage of trading using opposite Microsoft and Infinity Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Infinity Bank 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 Infinity Bank will offset losses from the drop in Infinity Bank's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Infinity Bank vs. Piraeus Bank SA | Infinity Bank vs. Turkiye Garanti Bankasi | Infinity Bank vs. Delhi Bank Corp | Infinity Bank vs. Uwharrie Capital Corp |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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