Correlation Between Microsoft and Loomis AB
Can any of the company-specific risk be diversified away by investing in both Microsoft and Loomis AB 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 Loomis AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Loomis AB, you can compare the effects of market volatilities on Microsoft and Loomis AB 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 Loomis AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Loomis AB.
Diversification Opportunities for Microsoft and Loomis AB
Very good diversification
The 3 months correlation between Microsoft and Loomis is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Loomis AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis AB 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 Loomis AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loomis AB has no effect on the direction of Microsoft i.e., Microsoft and Loomis AB go up and down completely randomly.
Pair Corralation between Microsoft and Loomis AB
Given the investment horizon of 90 days Microsoft is expected to generate 0.54 times more return on investment than Loomis AB. However, Microsoft is 1.87 times less risky than Loomis AB. It trades about 0.1 of its potential returns per unit of risk. Loomis AB is currently generating about 0.05 per unit of risk. If you would invest 23,313 in Microsoft on September 14, 2024 and sell it today you would earn a total of 21,414 from holding Microsoft or generate 91.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 61.01% |
| Values | Daily Returns |
Microsoft vs. Loomis AB
Performance |
| Timeline |
| Microsoft |
| Loomis AB |
Microsoft and Loomis AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Loomis AB
The main advantage of trading using opposite Microsoft and Loomis AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Loomis AB 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 Loomis AB will offset losses from the drop in Loomis AB's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Loomis AB vs. Allegion PLC | Loomis AB vs. MSA Safety | Loomis AB vs. Resideo Technologies | Loomis AB vs. NL Industries |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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