Correlation Between Microsoft and Imerys SA
Can any of the company-specific risk be diversified away by investing in both Microsoft and Imerys SA 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 Imerys SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Imerys SA, you can compare the effects of market volatilities on Microsoft and Imerys SA 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 Imerys SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Imerys SA.
Diversification Opportunities for Microsoft and Imerys SA
Very good diversification
The 3 months correlation between Microsoft and Imerys is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Imerys SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imerys SA 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 Imerys SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imerys SA has no effect on the direction of Microsoft i.e., Microsoft and Imerys SA go up and down completely randomly.
Pair Corralation between Microsoft and Imerys SA
Given the investment horizon of 90 days Microsoft is expected to generate 1.18 times more return on investment than Imerys SA. However, Microsoft is 1.18 times more volatile than Imerys SA. It trades about -0.06 of its potential returns per unit of risk. Imerys SA is currently generating about -0.33 per unit of risk. If you would invest 42,785 in Microsoft on November 5, 2024 and sell it today you would lose (1,279) from holding Microsoft or give up 2.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Microsoft vs. Imerys SA
Performance |
| Timeline |
| Microsoft |
| Imerys SA |
Microsoft and Imerys SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Imerys SA
The main advantage of trading using opposite Microsoft and Imerys SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Imerys SA 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 Imerys SA will offset losses from the drop in Imerys SA's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Imerys SA vs. Rubis SCA | Imerys SA vs. Eramet SA | Imerys SA vs. Nexity | Imerys SA vs. Compagnie de Saint Gobain |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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