Correlation Between Microsoft and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both Microsoft and Singapore Airlines 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 Singapore Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Singapore Airlines, you can compare the effects of market volatilities on Microsoft and Singapore Airlines 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 Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Singapore Airlines.
Diversification Opportunities for Microsoft and Singapore Airlines
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and Singapore is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Singapore Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines 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 Singapore Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Airlines has no effect on the direction of Microsoft i.e., Microsoft and Singapore Airlines go up and down completely randomly.
Pair Corralation between Microsoft and Singapore Airlines
Given the investment horizon of 90 days Microsoft is expected to generate 1.58 times more return on investment than Singapore Airlines. However, Microsoft is 1.58 times more volatile than Singapore Airlines. It trades about 0.0 of its potential returns per unit of risk. Singapore Airlines is currently generating about -0.13 per unit of risk. If you would invest 42,574 in Microsoft on August 29, 2024 and sell it today you would lose (188.00) from holding Microsoft or give up 0.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Microsoft vs. Singapore Airlines
Performance |
| Timeline |
| Microsoft |
| Singapore Airlines |
Microsoft and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Singapore Airlines
The main advantage of trading using opposite Microsoft and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Singapore Airlines 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 Singapore Airlines will offset losses from the drop in Singapore Airlines' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Singapore Airlines vs. Finnair Oyj | Singapore Airlines vs. easyJet plc | Singapore Airlines vs. Norse Atlantic ASA | Singapore Airlines vs. Air China Limited |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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