Correlation Between Microsoft and Marubeni
Can any of the company-specific risk be diversified away by investing in both Microsoft and Marubeni 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 Marubeni into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Marubeni, you can compare the effects of market volatilities on Microsoft and Marubeni 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 Marubeni. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Marubeni.
Diversification Opportunities for Microsoft and Marubeni
Significant diversification
The 3 months correlation between Microsoft and Marubeni is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Marubeni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marubeni 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 Marubeni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marubeni has no effect on the direction of Microsoft i.e., Microsoft and Marubeni go up and down completely randomly.
Pair Corralation between Microsoft and Marubeni
Given the investment horizon of 90 days Microsoft is expected to generate 0.44 times more return on investment than Marubeni. However, Microsoft is 2.28 times less risky than Marubeni. It trades about 0.02 of its potential returns per unit of risk. Marubeni is currently generating about 0.01 per unit of risk. If you would invest 42,574 in Microsoft on August 29, 2024 and sell it today you would earn a total of 225.00 from holding Microsoft or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Marubeni
Performance |
| Timeline |
| Microsoft |
| Marubeni |
Microsoft and Marubeni Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Marubeni
The main advantage of trading using opposite Microsoft and Marubeni positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Marubeni 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 Marubeni will offset losses from the drop in Marubeni's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Marubeni vs. Marubeni Corp ADR | Marubeni vs. Mitsubishi Corp | Marubeni vs. Sumitomo Corp ADR | Marubeni vs. Itochu Corp ADR |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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