Correlation Between Microsoft and Bank of NT
Can any of the company-specific risk be diversified away by investing in both Microsoft and Bank of NT 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 Bank of NT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Bank of NT, you can compare the effects of market volatilities on Microsoft and Bank of NT 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 Bank of NT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Bank of NT.
Diversification Opportunities for Microsoft and Bank of NT
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Bank is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Bank of NT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of NT 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 Bank of NT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of NT has no effect on the direction of Microsoft i.e., Microsoft and Bank of NT go up and down completely randomly.
Pair Corralation between Microsoft and Bank of NT
Given the investment horizon of 90 days Microsoft is expected to generate 0.7 times more return on investment than Bank of NT. However, Microsoft is 1.42 times less risky than Bank of NT. It trades about 0.08 of its potential returns per unit of risk. Bank of NT is currently generating about 0.03 per unit of risk. If you would invest 24,116 in Microsoft on August 27, 2024 and sell it today you would earn a total of 17,584 from holding Microsoft or generate 72.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Bank of NT
Performance |
| Timeline |
| Microsoft |
| Bank of NT |
Microsoft and Bank of NT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Bank of NT
The main advantage of trading using opposite Microsoft and Bank of NT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Bank of NT 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 Bank of NT will offset losses from the drop in Bank of NT's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Rapid7 Inc |
| Bank of NT vs. PJT Partners | Bank of NT vs. National Bank Holdings | Bank of NT vs. FB Financial Corp | Bank of NT vs. Northrim BanCorp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |