Correlation Between Microsoft and ENEOS Holdings
Can any of the company-specific risk be diversified away by investing in both Microsoft and ENEOS Holdings 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 ENEOS Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and ENEOS Holdings, you can compare the effects of market volatilities on Microsoft and ENEOS Holdings 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 ENEOS Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and ENEOS Holdings.
Diversification Opportunities for Microsoft and ENEOS Holdings
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and ENEOS is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and ENEOS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENEOS Holdings 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 ENEOS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENEOS Holdings has no effect on the direction of Microsoft i.e., Microsoft and ENEOS Holdings go up and down completely randomly.
Pair Corralation between Microsoft and ENEOS Holdings
Given the investment horizon of 90 days Microsoft is expected to generate 0.75 times more return on investment than ENEOS Holdings. However, Microsoft is 1.34 times less risky than ENEOS Holdings. It trades about 0.28 of its potential returns per unit of risk. ENEOS Holdings is currently generating about -0.05 per unit of risk. If you would invest 42,218 in Microsoft on September 13, 2024 and sell it today you would earn a total of 2,738 from holding Microsoft or generate 6.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. ENEOS Holdings
Performance |
| Timeline |
| Microsoft |
| ENEOS Holdings |
Microsoft and ENEOS Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and ENEOS Holdings
The main advantage of trading using opposite Microsoft and ENEOS Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, ENEOS Holdings 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 ENEOS Holdings will offset losses from the drop in ENEOS Holdings' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| ENEOS Holdings vs. CVR Energy | ENEOS Holdings vs. Valero Energy | ENEOS Holdings vs. Phillips 66 | ENEOS Holdings vs. Marathon Petroleum 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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