Correlation Between Microsoft and Nitro Games
Can any of the company-specific risk be diversified away by investing in both Microsoft and Nitro Games 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 Nitro Games into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Nitro Games Oyj, you can compare the effects of market volatilities on Microsoft and Nitro Games 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 Nitro Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Nitro Games.
Diversification Opportunities for Microsoft and Nitro Games
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Nitro is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Nitro Games Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nitro Games Oyj 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 Nitro Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nitro Games Oyj has no effect on the direction of Microsoft i.e., Microsoft and Nitro Games go up and down completely randomly.
Pair Corralation between Microsoft and Nitro Games
Given the investment horizon of 90 days Microsoft is expected to under-perform the Nitro Games. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 2.53 times less risky than Nitro Games. The stock trades about -0.07 of its potential returns per unit of risk. The Nitro Games Oyj is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 224.00 in Nitro Games Oyj on October 22, 2024 and sell it today you would earn a total of 20.00 from holding Nitro Games Oyj or generate 8.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 83.33% |
| Values | Daily Returns |
Microsoft vs. Nitro Games Oyj
Performance |
| Timeline |
| Microsoft |
| Nitro Games Oyj |
Microsoft and Nitro Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Nitro Games
The main advantage of trading using opposite Microsoft and Nitro Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Nitro Games 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 Nitro Games will offset losses from the drop in Nitro Games' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. BLOCK INC | Microsoft vs. Adobe Systems Incorporated |
| Nitro Games vs. Stillfront Group AB | Nitro Games vs. G5 Entertainment publ | Nitro Games vs. Enad Global 7 | Nitro Games vs. Starbreeze AB |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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