Correlation Between Microsoft and Oasis Petroleum
Can any of the company-specific risk be diversified away by investing in both Microsoft and Oasis Petroleum 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 Oasis Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Oasis Petroleum, you can compare the effects of market volatilities on Microsoft and Oasis Petroleum 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 Oasis Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Oasis Petroleum.
Diversification Opportunities for Microsoft and Oasis Petroleum
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microsoft and Oasis is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Oasis Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oasis Petroleum 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 Oasis Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oasis Petroleum has no effect on the direction of Microsoft i.e., Microsoft and Oasis Petroleum go up and down completely randomly.
Pair Corralation between Microsoft and Oasis Petroleum
Given the investment horizon of 90 days Microsoft is expected to generate 0.4 times more return on investment than Oasis Petroleum. However, Microsoft is 2.49 times less risky than Oasis Petroleum. It trades about 0.07 of its potential returns per unit of risk. Oasis Petroleum is currently generating about 0.01 per unit of risk. If you would invest 26,694 in Microsoft on November 2, 2024 and sell it today you would earn a total of 15,126 from holding Microsoft or generate 56.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 90.28% |
| Values | Daily Returns |
Microsoft vs. Oasis Petroleum
Performance |
| Timeline |
| Microsoft |
| Oasis Petroleum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Oasis Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Oasis Petroleum
The main advantage of trading using opposite Microsoft and Oasis Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Oasis Petroleum 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 Oasis Petroleum will offset losses from the drop in Oasis Petroleum's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Oasis Petroleum vs. NiSource | Oasis Petroleum vs. MobileSmith | Oasis Petroleum vs. Iridium Communications | Oasis Petroleum vs. Kinetik Holdings |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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