Correlation Between Microsoft and Inpex Corp
Can any of the company-specific risk be diversified away by investing in both Microsoft and Inpex Corp 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 Inpex Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Inpex Corp ADR, you can compare the effects of market volatilities on Microsoft and Inpex Corp 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 Inpex Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Inpex Corp.
Diversification Opportunities for Microsoft and Inpex Corp
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Inpex is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Inpex Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inpex Corp ADR 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 Inpex Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inpex Corp ADR has no effect on the direction of Microsoft i.e., Microsoft and Inpex Corp go up and down completely randomly.
Pair Corralation between Microsoft and Inpex Corp
Given the investment horizon of 90 days Microsoft is expected to generate 0.63 times more return on investment than Inpex Corp. However, Microsoft is 1.58 times less risky than Inpex Corp. It trades about 0.04 of its potential returns per unit of risk. Inpex Corp ADR is currently generating about 0.0 per unit of risk. If you would invest 37,173 in Microsoft on August 27, 2024 and sell it today you would earn a total of 4,527 from holding Microsoft or generate 12.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Inpex Corp ADR
Performance |
| Timeline |
| Microsoft |
| Inpex Corp ADR |
Microsoft and Inpex Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Inpex Corp
The main advantage of trading using opposite Microsoft and Inpex Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Inpex Corp 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 Inpex Corp will offset losses from the drop in Inpex Corp's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Rapid7 Inc |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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