Correlation Between Microsoft and Nepa AB
Can any of the company-specific risk be diversified away by investing in both Microsoft and Nepa 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 Nepa AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Nepa AB, you can compare the effects of market volatilities on Microsoft and Nepa 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 Nepa AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Nepa AB.
Diversification Opportunities for Microsoft and Nepa AB
Very good diversification
The 3 months correlation between Microsoft and Nepa is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Nepa AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nepa 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 Nepa AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nepa AB has no effect on the direction of Microsoft i.e., Microsoft and Nepa AB go up and down completely randomly.
Pair Corralation between Microsoft and Nepa AB
Given the investment horizon of 90 days Microsoft is expected to generate 0.37 times more return on investment than Nepa AB. However, Microsoft is 2.67 times less risky than Nepa AB. It trades about 0.04 of its potential returns per unit of risk. Nepa AB is currently generating about -0.03 per unit of risk. If you would invest 37,325 in Microsoft on August 25, 2024 and sell it today you would earn a total of 4,375 from holding Microsoft or generate 11.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.57% |
| Values | Daily Returns |
Microsoft vs. Nepa AB
Performance |
| Timeline |
| Microsoft |
| Nepa AB |
Microsoft and Nepa AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Nepa AB
The main advantage of trading using opposite Microsoft and Nepa AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Nepa 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 Nepa AB will offset losses from the drop in Nepa AB's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Nepa AB vs. MAG Interactive AB | Nepa AB vs. Kambi Group PLC | Nepa AB vs. Hexatronic Group AB | Nepa AB vs. Integrum AB Series |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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