Correlation Between Microsoft and ProSiebenSat1 Media
Can any of the company-specific risk be diversified away by investing in both Microsoft and ProSiebenSat1 Media 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 ProSiebenSat1 Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and ProSiebenSat1 Media AG, you can compare the effects of market volatilities on Microsoft and ProSiebenSat1 Media 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 ProSiebenSat1 Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and ProSiebenSat1 Media.
Diversification Opportunities for Microsoft and ProSiebenSat1 Media
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and ProSiebenSat1 is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and ProSiebenSat1 Media AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProSiebenSat1 Media 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 ProSiebenSat1 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProSiebenSat1 Media has no effect on the direction of Microsoft i.e., Microsoft and ProSiebenSat1 Media go up and down completely randomly.
Pair Corralation between Microsoft and ProSiebenSat1 Media
Given the investment horizon of 90 days Microsoft is expected to generate 0.47 times more return on investment than ProSiebenSat1 Media. However, Microsoft is 2.14 times less risky than ProSiebenSat1 Media. It trades about -0.04 of its potential returns per unit of risk. ProSiebenSat1 Media AG is currently generating about -0.3 per unit of risk. If you would invest 43,167 in Microsoft on August 31, 2024 and sell it today you would lose (868.00) from holding Microsoft or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. ProSiebenSat1 Media AG
Performance |
| Timeline |
| Microsoft |
| ProSiebenSat1 Media |
Microsoft and ProSiebenSat1 Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and ProSiebenSat1 Media
The main advantage of trading using opposite Microsoft and ProSiebenSat1 Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, ProSiebenSat1 Media 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 ProSiebenSat1 Media will offset losses from the drop in ProSiebenSat1 Media's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| ProSiebenSat1 Media vs. ITV plc | ProSiebenSat1 Media vs. iHeartMedia | ProSiebenSat1 Media vs. TV Azteca SAB |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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