Correlation Between Microsoft and Surgical Science
Can any of the company-specific risk be diversified away by investing in both Microsoft and Surgical Science 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 Surgical Science into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Surgical Science Sweden, you can compare the effects of market volatilities on Microsoft and Surgical Science 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 Surgical Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Surgical Science.
Diversification Opportunities for Microsoft and Surgical Science
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Surgical is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Surgical Science Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surgical Science Sweden 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 Surgical Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surgical Science Sweden has no effect on the direction of Microsoft i.e., Microsoft and Surgical Science go up and down completely randomly.
Pair Corralation between Microsoft and Surgical Science
Given the investment horizon of 90 days Microsoft is expected to generate 5.38 times less return on investment than Surgical Science. But when comparing it to its historical volatility, Microsoft is 2.28 times less risky than Surgical Science. It trades about 0.01 of its potential returns per unit of risk. Surgical Science Sweden is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 17,710 in Surgical Science Sweden on November 5, 2024 and sell it today you would lose (420.00) from holding Surgical Science Sweden or give up 2.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Microsoft vs. Surgical Science Sweden
Performance |
| Timeline |
| Microsoft |
| Surgical Science Sweden |
Microsoft and Surgical Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Surgical Science
The main advantage of trading using opposite Microsoft and Surgical Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Surgical Science 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 Surgical Science will offset losses from the drop in Surgical Science's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Surgical Science vs. BICO Group AB | Surgical Science vs. Hexatronic Group AB | Surgical Science vs. Swedencare publ AB | Surgical Science vs. MIPS 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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