Correlation Between Microsoft and Nuenergy Gas
Can any of the company-specific risk be diversified away by investing in both Microsoft and Nuenergy Gas 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 Nuenergy Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Nuenergy Gas, you can compare the effects of market volatilities on Microsoft and Nuenergy Gas 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 Nuenergy Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Nuenergy Gas.
Diversification Opportunities for Microsoft and Nuenergy Gas
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Nuenergy is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Nuenergy Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuenergy Gas 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 Nuenergy Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuenergy Gas has no effect on the direction of Microsoft i.e., Microsoft and Nuenergy Gas go up and down completely randomly.
Pair Corralation between Microsoft and Nuenergy Gas
Given the investment horizon of 90 days Microsoft is expected to generate 0.44 times more return on investment than Nuenergy Gas. However, Microsoft is 2.28 times less risky than Nuenergy Gas. It trades about -0.04 of its potential returns per unit of risk. Nuenergy Gas is currently generating about -0.45 per unit of risk. If you would invest 42,456 in Microsoft on November 9, 2024 and sell it today you would lose (874.00) from holding Microsoft or give up 2.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 25.0% |
| Values | Daily Returns |
Microsoft vs. Nuenergy Gas
Performance |
| Timeline |
| Microsoft |
| Nuenergy Gas |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Microsoft and Nuenergy Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Nuenergy Gas
The main advantage of trading using opposite Microsoft and Nuenergy Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Nuenergy Gas 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 Nuenergy Gas will offset losses from the drop in Nuenergy Gas' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Nuenergy Gas vs. Sandon Capital Investments | Nuenergy Gas vs. Djerriwarrh Investments | Nuenergy Gas vs. Alternative Investment Trust | Nuenergy Gas vs. Auctus Alternative Investments |
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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