Correlation Between Microsoft and NSI NV
Can any of the company-specific risk be diversified away by investing in both Microsoft and NSI NV 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 NSI NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and NSI NV, you can compare the effects of market volatilities on Microsoft and NSI NV 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 NSI NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and NSI NV.
Diversification Opportunities for Microsoft and NSI NV
Very weak diversification
The 3 months correlation between Microsoft and NSI is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and NSI NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSI NV 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 NSI NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSI NV has no effect on the direction of Microsoft i.e., Microsoft and NSI NV go up and down completely randomly.
Pair Corralation between Microsoft and NSI NV
Given the investment horizon of 90 days Microsoft is expected to generate 1.39 times more return on investment than NSI NV. However, Microsoft is 1.39 times more volatile than NSI NV. It trades about 0.03 of its potential returns per unit of risk. NSI NV is currently generating about -0.02 per unit of risk. If you would invest 40,978 in Microsoft on August 28, 2024 and sell it today you would earn a total of 901.00 from holding Microsoft or generate 2.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Microsoft vs. NSI NV
Performance |
| Timeline |
| Microsoft |
| NSI NV |
Microsoft and NSI NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and NSI NV
The main advantage of trading using opposite Microsoft and NSI NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, NSI NV 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 NSI NV will offset losses from the drop in NSI NV's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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