Correlation Between Microsoft and Klil Industries
Can any of the company-specific risk be diversified away by investing in both Microsoft and Klil Industries 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 Klil Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Klil Industries, you can compare the effects of market volatilities on Microsoft and Klil Industries 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 Klil Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Klil Industries.
Diversification Opportunities for Microsoft and Klil Industries
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Klil is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Klil Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klil Industries 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 Klil Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klil Industries has no effect on the direction of Microsoft i.e., Microsoft and Klil Industries go up and down completely randomly.
Pair Corralation between Microsoft and Klil Industries
Given the investment horizon of 90 days Microsoft is expected to generate 44.63 times less return on investment than Klil Industries. But when comparing it to its historical volatility, Microsoft is 2.34 times less risky than Klil Industries. It trades about 0.01 of its potential returns per unit of risk. Klil Industries is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,998,000 in Klil Industries on September 3, 2024 and sell it today you would earn a total of 922,000 from holding Klil Industries or generate 46.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 75.2% |
| Values | Daily Returns |
Microsoft vs. Klil Industries
Performance |
| Timeline |
| Microsoft |
| Klil Industries |
Microsoft and Klil Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Klil Industries
The main advantage of trading using opposite Microsoft and Klil Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Klil Industries 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 Klil Industries will offset losses from the drop in Klil Industries' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Klil Industries vs. Scope Metals Group | Klil Industries vs. Inrom Construction Industries | Klil Industries vs. Elbit Systems | Klil Industries vs. Rami Levi |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |