Correlation Between Microsoft and Novina SA
Can any of the company-specific risk be diversified away by investing in both Microsoft and Novina 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 Novina SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Novina SA, you can compare the effects of market volatilities on Microsoft and Novina 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 Novina SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Novina SA.
Diversification Opportunities for Microsoft and Novina SA
Average diversification
The 3 months correlation between Microsoft and Novina is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Novina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novina 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 Novina SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novina SA has no effect on the direction of Microsoft i.e., Microsoft and Novina SA go up and down completely randomly.
Pair Corralation between Microsoft and Novina SA
Given the investment horizon of 90 days Microsoft is expected to generate 6.08 times less return on investment than Novina SA. But when comparing it to its historical volatility, Microsoft is 5.98 times less risky than Novina SA. It trades about 0.06 of its potential returns per unit of risk. Novina SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 48.00 in Novina SA on August 31, 2024 and sell it today you would earn a total of 67.00 from holding Novina SA or generate 139.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Microsoft vs. Novina SA
Performance |
| Timeline |
| Microsoft |
| Novina SA |
Microsoft and Novina SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Novina SA
The main advantage of trading using opposite Microsoft and Novina SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Novina 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 Novina SA will offset losses from the drop in Novina SA's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Novina SA vs. Banco Santander SA | Novina SA vs. UniCredit SpA | Novina SA vs. CEZ as | Novina SA vs. Polski Koncern Naftowy |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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