Correlation Between Microsoft and Norva24 Group
Can any of the company-specific risk be diversified away by investing in both Microsoft and Norva24 Group 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 Norva24 Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Norva24 Group AB, you can compare the effects of market volatilities on Microsoft and Norva24 Group 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 Norva24 Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Norva24 Group.
Diversification Opportunities for Microsoft and Norva24 Group
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Norva24 is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Norva24 Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norva24 Group 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 Norva24 Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norva24 Group AB has no effect on the direction of Microsoft i.e., Microsoft and Norva24 Group go up and down completely randomly.
Pair Corralation between Microsoft and Norva24 Group
Given the investment horizon of 90 days Microsoft is expected to generate 1.74 times more return on investment than Norva24 Group. However, Microsoft is 1.74 times more volatile than Norva24 Group AB. It trades about -0.06 of its potential returns per unit of risk. Norva24 Group AB is currently generating about -0.22 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 | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Microsoft vs. Norva24 Group AB
Performance |
| Timeline |
| Microsoft |
| Norva24 Group AB |
Microsoft and Norva24 Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Norva24 Group
The main advantage of trading using opposite Microsoft and Norva24 Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Norva24 Group 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 Norva24 Group will offset losses from the drop in Norva24 Group's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Norva24 Group vs. Spectrumone publ AB | Norva24 Group vs. Kancera AB | Norva24 Group vs. Cortus Energy AB | Norva24 Group vs. SolTech Energy Sweden |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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