Correlation Between Microsoft and Origin Enterprises
Can any of the company-specific risk be diversified away by investing in both Microsoft and Origin Enterprises 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 Origin Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Origin Enterprises plc, you can compare the effects of market volatilities on Microsoft and Origin Enterprises 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 Origin Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Origin Enterprises.
Diversification Opportunities for Microsoft and Origin Enterprises
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Origin is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Origin Enterprises plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Enterprises plc 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 Origin Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Enterprises plc has no effect on the direction of Microsoft i.e., Microsoft and Origin Enterprises go up and down completely randomly.
Pair Corralation between Microsoft and Origin Enterprises
Given the investment horizon of 90 days Microsoft is expected to generate 1.06 times more return on investment than Origin Enterprises. However, Microsoft is 1.06 times more volatile than Origin Enterprises plc. It trades about 0.03 of its potential returns per unit of risk. Origin Enterprises plc is currently generating about -0.11 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 | 100.0% |
| Values | Daily Returns |
Microsoft vs. Origin Enterprises plc
Performance |
| Timeline |
| Microsoft |
| Origin Enterprises plc |
Microsoft and Origin Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Origin Enterprises
The main advantage of trading using opposite Microsoft and Origin Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Origin Enterprises 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 Origin Enterprises will offset losses from the drop in Origin Enterprises' long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Origin Enterprises vs. Postal Savings Bank | Origin Enterprises vs. The Home Depot | Origin Enterprises vs. MI Homes | Origin Enterprises vs. Marie Brizard Wine |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |