Correlation Between Microsoft and Otovo AS
Can any of the company-specific risk be diversified away by investing in both Microsoft and Otovo AS 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 Otovo AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Otovo AS, you can compare the effects of market volatilities on Microsoft and Otovo AS 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 Otovo AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Otovo AS.
Diversification Opportunities for Microsoft and Otovo AS
Significant diversification
The 3 months correlation between Microsoft and Otovo is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Otovo AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otovo AS 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 Otovo AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otovo AS has no effect on the direction of Microsoft i.e., Microsoft and Otovo AS go up and down completely randomly.
Pair Corralation between Microsoft and Otovo AS
Given the investment horizon of 90 days Microsoft is expected to generate 0.29 times more return on investment than Otovo AS. However, Microsoft is 3.49 times less risky than Otovo AS. It trades about 0.08 of its potential returns per unit of risk. Otovo AS is currently generating about -0.1 per unit of risk. If you would invest 25,277 in Microsoft on September 3, 2024 and sell it today you would earn a total of 17,821 from holding Microsoft or generate 70.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Microsoft vs. Otovo AS
Performance |
| Timeline |
| Microsoft |
| Otovo AS |
Microsoft and Otovo AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Otovo AS
The main advantage of trading using opposite Microsoft and Otovo AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Otovo AS 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 Otovo AS will offset losses from the drop in Otovo AS's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Otovo AS vs. Sea1 Offshore | Otovo AS vs. Beerenberg AS | Otovo AS vs. Clean Seas Seafood | Otovo AS vs. Cloudberry Clean Energy |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |