Correlation Between Microsoft and Opal Balance
Can any of the company-specific risk be diversified away by investing in both Microsoft and Opal Balance 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 Opal Balance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Opal Balance, you can compare the effects of market volatilities on Microsoft and Opal Balance 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 Opal Balance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Opal Balance.
Diversification Opportunities for Microsoft and Opal Balance
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Opal is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Opal Balance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opal Balance 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 Opal Balance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opal Balance has no effect on the direction of Microsoft i.e., Microsoft and Opal Balance go up and down completely randomly.
Pair Corralation between Microsoft and Opal Balance
Given the investment horizon of 90 days Microsoft is expected to under-perform the Opal Balance. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.94 times less risky than Opal Balance. The stock trades about -0.21 of its potential returns per unit of risk. The Opal Balance is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 22,150 in Opal Balance on December 1, 2024 and sell it today you would earn a total of 1,650 from holding Opal Balance or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 85.71% |
| Values | Daily Returns |
Microsoft vs. Opal Balance
Performance |
| Timeline |
| Microsoft |
| Opal Balance |
Microsoft and Opal Balance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Opal Balance
The main advantage of trading using opposite Microsoft and Opal Balance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Opal Balance 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 Opal Balance will offset losses from the drop in Opal Balance's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Opal Balance vs. Nawi Brothers Group | Opal Balance vs. EN Shoham Business | Opal Balance vs. Peninsula Group | Opal Balance vs. Shikun Binui |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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