Correlation Between Microsoft and ProfilGruppen
Can any of the company-specific risk be diversified away by investing in both Microsoft and ProfilGruppen 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 ProfilGruppen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and ProfilGruppen AB, you can compare the effects of market volatilities on Microsoft and ProfilGruppen 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 ProfilGruppen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and ProfilGruppen.
Diversification Opportunities for Microsoft and ProfilGruppen
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microsoft and ProfilGruppen is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and ProfilGruppen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProfilGruppen AB 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 ProfilGruppen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProfilGruppen AB has no effect on the direction of Microsoft i.e., Microsoft and ProfilGruppen go up and down completely randomly.
Pair Corralation between Microsoft and ProfilGruppen
Given the investment horizon of 90 days Microsoft is expected to generate 0.68 times more return on investment than ProfilGruppen. However, Microsoft is 1.46 times less risky than ProfilGruppen. It trades about 0.05 of its potential returns per unit of risk. ProfilGruppen AB is currently generating about 0.03 per unit of risk. If you would invest 30,526 in Microsoft on December 1, 2024 and sell it today you would earn a total of 9,173 from holding Microsoft or generate 30.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.34% |
| Values | Daily Returns |
Microsoft vs. ProfilGruppen AB
Performance |
| Timeline |
| Microsoft |
| ProfilGruppen AB |
Microsoft and ProfilGruppen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and ProfilGruppen
The main advantage of trading using opposite Microsoft and ProfilGruppen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, ProfilGruppen 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 ProfilGruppen will offset losses from the drop in ProfilGruppen's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| ProfilGruppen vs. Svedbergs i Dalstorp | ProfilGruppen vs. Softronic AB | ProfilGruppen vs. Novotek AB | ProfilGruppen vs. Prevas AB |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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