Correlation Between Microsoft and Klinique Med
Can any of the company-specific risk be diversified away by investing in both Microsoft and Klinique Med 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 Klinique Med into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and The Klinique Med, you can compare the effects of market volatilities on Microsoft and Klinique Med 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 Klinique Med. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Klinique Med.
Diversification Opportunities for Microsoft and Klinique Med
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Klinique is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and The Klinique Med in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klinique Med 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 Klinique Med. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klinique Med has no effect on the direction of Microsoft i.e., Microsoft and Klinique Med go up and down completely randomly.
Pair Corralation between Microsoft and Klinique Med
Given the investment horizon of 90 days Microsoft is expected to under-perform the Klinique Med. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.36 times less risky than Klinique Med. The stock trades about -0.04 of its potential returns per unit of risk. The The Klinique Med is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,175 in The Klinique Med on August 30, 2024 and sell it today you would earn a total of 100.00 from holding The Klinique Med or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. The Klinique Med
Performance |
| Timeline |
| Microsoft |
| Klinique Med |
Microsoft and Klinique Med Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Klinique Med
The main advantage of trading using opposite Microsoft and Klinique Med positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Klinique Med 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 Klinique Med will offset losses from the drop in Klinique Med's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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