Correlation Between Microsoft and PIMCO Euro
Can any of the company-specific risk be diversified away by investing in both Microsoft and PIMCO Euro 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 PIMCO Euro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and PIMCO Euro Short, you can compare the effects of market volatilities on Microsoft and PIMCO Euro 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 PIMCO Euro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and PIMCO Euro.
Diversification Opportunities for Microsoft and PIMCO Euro
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and PIMCO is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and PIMCO Euro Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Euro Short 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 PIMCO Euro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Euro Short has no effect on the direction of Microsoft i.e., Microsoft and PIMCO Euro go up and down completely randomly.
Pair Corralation between Microsoft and PIMCO Euro
Given the investment horizon of 90 days Microsoft is expected to under-perform the PIMCO Euro. In addition to that, Microsoft is 55.57 times more volatile than PIMCO Euro Short. It trades about -0.08 of its total potential returns per unit of risk. PIMCO Euro Short is currently generating about 0.64 per unit of volatility. If you would invest 10,319 in PIMCO Euro Short on October 20, 2024 and sell it today you would earn a total of 20.00 from holding PIMCO Euro Short or generate 0.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 80.0% |
| Values | Daily Returns |
Microsoft vs. PIMCO Euro Short
Performance |
| Timeline |
| Microsoft |
| PIMCO Euro Short |
Microsoft and PIMCO Euro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and PIMCO Euro
The main advantage of trading using opposite Microsoft and PIMCO Euro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, PIMCO Euro 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 PIMCO Euro will offset losses from the drop in PIMCO Euro's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| PIMCO Euro vs. UBSFund Solutions MSCI | PIMCO Euro vs. Vanguard SP 500 | PIMCO Euro vs. iShares Core SP | PIMCO Euro vs. Lyxor Japan UCITS |
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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