Correlation Between Microsoft and Integrated Wind
Can any of the company-specific risk be diversified away by investing in both Microsoft and Integrated Wind 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 Integrated Wind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Integrated Wind Solutions, you can compare the effects of market volatilities on Microsoft and Integrated Wind 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 Integrated Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Integrated Wind.
Diversification Opportunities for Microsoft and Integrated Wind
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Integrated is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Integrated Wind Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Wind Solutions 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 Integrated Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Wind Solutions has no effect on the direction of Microsoft i.e., Microsoft and Integrated Wind go up and down completely randomly.
Pair Corralation between Microsoft and Integrated Wind
Given the investment horizon of 90 days Microsoft is expected to generate 0.58 times more return on investment than Integrated Wind. However, Microsoft is 1.72 times less risky than Integrated Wind. It trades about -0.09 of its potential returns per unit of risk. Integrated Wind Solutions is currently generating about -0.1 per unit of risk. If you would invest 42,398 in Microsoft on November 30, 2024 and sell it today you would lose (2,699) from holding Microsoft or give up 6.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.35% |
| Values | Daily Returns |
Microsoft vs. Integrated Wind Solutions
Performance |
| Timeline |
| Microsoft |
| Integrated Wind Solutions |
Microsoft and Integrated Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Integrated Wind
The main advantage of trading using opposite Microsoft and Integrated Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Integrated Wind 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 Integrated Wind will offset losses from the drop in Integrated Wind's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Integrated Wind vs. Edda Wind ASA | Integrated Wind vs. Cloudberry Clean Energy | Integrated Wind vs. Cadeler As | Integrated Wind vs. Otovo AS |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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