Correlation Between Microsoft and Nidec
Can any of the company-specific risk be diversified away by investing in both Microsoft and Nidec 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 Nidec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Nidec, you can compare the effects of market volatilities on Microsoft and Nidec 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 Nidec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Nidec.
Diversification Opportunities for Microsoft and Nidec
Modest diversification
The 3 months correlation between Microsoft and Nidec is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Nidec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nidec 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 Nidec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nidec has no effect on the direction of Microsoft i.e., Microsoft and Nidec go up and down completely randomly.
Pair Corralation between Microsoft and Nidec
If you would invest 1,360 in Nidec on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Nidec or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
Microsoft vs. Nidec
Performance |
| Timeline |
| Microsoft |
| Nidec |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Nidec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Nidec
The main advantage of trading using opposite Microsoft and Nidec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Nidec 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 Nidec will offset losses from the drop in Nidec's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Nidec vs. Daifuku Co | Nidec vs. Eaton PLC | Nidec vs. Yokogawa Electric Corp | Nidec vs. Brewbilt Manufacturing |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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