Correlation Between Microsoft and Outokumpu Oyj
Can any of the company-specific risk be diversified away by investing in both Microsoft and Outokumpu Oyj 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 Outokumpu Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Outokumpu Oyj, you can compare the effects of market volatilities on Microsoft and Outokumpu Oyj 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 Outokumpu Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Outokumpu Oyj.
Diversification Opportunities for Microsoft and Outokumpu Oyj
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Outokumpu is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Outokumpu Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outokumpu Oyj 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 Outokumpu Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outokumpu Oyj has no effect on the direction of Microsoft i.e., Microsoft and Outokumpu Oyj go up and down completely randomly.
Pair Corralation between Microsoft and Outokumpu Oyj
Given the investment horizon of 90 days Microsoft is expected to generate 0.61 times more return on investment than Outokumpu Oyj. However, Microsoft is 1.65 times less risky than Outokumpu Oyj. It trades about 0.07 of its potential returns per unit of risk. Outokumpu Oyj is currently generating about -0.05 per unit of risk. If you would invest 30,280 in Microsoft on August 31, 2024 and sell it today you would earn a total of 12,019 from holding Microsoft or generate 39.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 61.42% |
| Values | Daily Returns |
Microsoft vs. Outokumpu Oyj
Performance |
| Timeline |
| Microsoft |
| Outokumpu Oyj |
Microsoft and Outokumpu Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Outokumpu Oyj
The main advantage of trading using opposite Microsoft and Outokumpu Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Outokumpu Oyj 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 Outokumpu Oyj will offset losses from the drop in Outokumpu Oyj's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Outokumpu Oyj vs. Live Ventures | Outokumpu Oyj vs. WiMi Hologram Cloud | Outokumpu Oyj vs. Zhihu Inc ADR | Outokumpu Oyj vs. BCE Inc |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |