Correlation Between Microsoft and Instabank ASA
Can any of the company-specific risk be diversified away by investing in both Microsoft and Instabank ASA 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 Instabank ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Instabank ASA, you can compare the effects of market volatilities on Microsoft and Instabank ASA 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 Instabank ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Instabank ASA.
Diversification Opportunities for Microsoft and Instabank ASA
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Instabank is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Instabank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instabank ASA 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 Instabank ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Instabank ASA has no effect on the direction of Microsoft i.e., Microsoft and Instabank ASA go up and down completely randomly.
Pair Corralation between Microsoft and Instabank ASA
Given the investment horizon of 90 days Microsoft is expected to generate 1.11 times more return on investment than Instabank ASA. However, Microsoft is 1.11 times more volatile than Instabank ASA. It trades about 0.02 of its potential returns per unit of risk. Instabank ASA is currently generating about -0.05 per unit of risk. If you would invest 42,574 in Microsoft on August 29, 2024 and sell it today you would earn a total of 225.00 from holding Microsoft or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Instabank ASA
Performance |
| Timeline |
| Microsoft |
| Instabank ASA |
Microsoft and Instabank ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Instabank ASA
The main advantage of trading using opposite Microsoft and Instabank ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Instabank ASA 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 Instabank ASA will offset losses from the drop in Instabank ASA's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Instabank ASA vs. DnB ASA | Instabank ASA vs. Sparebank 1 SR | Instabank ASA vs. Sparebank 1 SMN | Instabank ASA vs. Sparebank 1 Ostfold |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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