Correlation Between Microsoft and Lyxor MSCI
Can any of the company-specific risk be diversified away by investing in both Microsoft and Lyxor MSCI 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 Lyxor MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Lyxor MSCI Brazil, you can compare the effects of market volatilities on Microsoft and Lyxor MSCI 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 Lyxor MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Lyxor MSCI.
Diversification Opportunities for Microsoft and Lyxor MSCI
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Lyxor is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Lyxor MSCI Brazil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor MSCI Brazil 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 Lyxor MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor MSCI Brazil has no effect on the direction of Microsoft i.e., Microsoft and Lyxor MSCI go up and down completely randomly.
Pair Corralation between Microsoft and Lyxor MSCI
Given the investment horizon of 90 days Microsoft is expected to generate 0.97 times more return on investment than Lyxor MSCI. However, Microsoft is 1.03 times less risky than Lyxor MSCI. It trades about 0.08 of its potential returns per unit of risk. Lyxor MSCI Brazil is currently generating about 0.01 per unit of risk. If you would invest 25,277 in Microsoft on September 3, 2024 and sell it today you would earn a total of 17,069 from holding Microsoft or generate 67.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Microsoft vs. Lyxor MSCI Brazil
Performance |
| Timeline |
| Microsoft |
| Lyxor MSCI Brazil |
Microsoft and Lyxor MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Lyxor MSCI
The main advantage of trading using opposite Microsoft and Lyxor MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Lyxor MSCI 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 Lyxor MSCI will offset losses from the drop in Lyxor MSCI's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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