Correlation Between Microsoft and SCOR SE
Can any of the company-specific risk be diversified away by investing in both Microsoft and SCOR SE 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 SCOR SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and SCOR SE, you can compare the effects of market volatilities on Microsoft and SCOR SE 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 SCOR SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and SCOR SE.
Diversification Opportunities for Microsoft and SCOR SE
Poor diversification
The 3 months correlation between Microsoft and SCOR is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and SCOR SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR SE 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 SCOR SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOR SE has no effect on the direction of Microsoft i.e., Microsoft and SCOR SE go up and down completely randomly.
Pair Corralation between Microsoft and SCOR SE
Given the investment horizon of 90 days Microsoft is expected to generate 0.59 times more return on investment than SCOR SE. However, Microsoft is 1.68 times less risky than SCOR SE. It trades about 0.09 of its potential returns per unit of risk. SCOR SE is currently generating about 0.03 per unit of risk. If you would invest 23,866 in Microsoft on October 12, 2024 and sell it today you would earn a total of 18,590 from holding Microsoft or generate 77.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.0% |
| Values | Daily Returns |
Microsoft vs. SCOR SE
Performance |
| Timeline |
| Microsoft |
| SCOR SE |
Microsoft and SCOR SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and SCOR SE
The main advantage of trading using opposite Microsoft and SCOR SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, SCOR SE 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 SCOR SE will offset losses from the drop in SCOR SE's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| SCOR SE vs. WIMFARM SA EO | SCOR SE vs. Firan Technology Group | SCOR SE vs. Casio Computer CoLtd | SCOR SE vs. AGRICULTBK HADR25 YC |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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