Correlation Between Microsoft and SANUWAVE Health
Can any of the company-specific risk be diversified away by investing in both Microsoft and SANUWAVE Health 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 SANUWAVE Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and SANUWAVE Health, you can compare the effects of market volatilities on Microsoft and SANUWAVE Health 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 SANUWAVE Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and SANUWAVE Health.
Diversification Opportunities for Microsoft and SANUWAVE Health
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and SANUWAVE is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and SANUWAVE Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANUWAVE Health 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 SANUWAVE Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANUWAVE Health has no effect on the direction of Microsoft i.e., Microsoft and SANUWAVE Health go up and down completely randomly.
Pair Corralation between Microsoft and SANUWAVE Health
Given the investment horizon of 90 days Microsoft is expected to under-perform the SANUWAVE Health. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 3.36 times less risky than SANUWAVE Health. The stock trades about -0.04 of its potential returns per unit of risk. The SANUWAVE Health is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,750 in SANUWAVE Health on August 31, 2024 and sell it today you would earn a total of 450.00 from holding SANUWAVE Health or generate 25.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. SANUWAVE Health
Performance |
| Timeline |
| Microsoft |
| SANUWAVE Health |
Microsoft and SANUWAVE Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and SANUWAVE Health
The main advantage of trading using opposite Microsoft and SANUWAVE Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, SANUWAVE Health 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 SANUWAVE Health will offset losses from the drop in SANUWAVE Health's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| SANUWAVE Health vs. Brainsway | SANUWAVE Health vs. Venus Concept | SANUWAVE Health vs. Tactile Systems Technology | SANUWAVE Health vs. Icecure Medical |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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