Correlation Between Microsoft and Svolder AB
Can any of the company-specific risk be diversified away by investing in both Microsoft and Svolder AB 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 Svolder AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Svolder AB, you can compare the effects of market volatilities on Microsoft and Svolder AB 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 Svolder AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Svolder AB.
Diversification Opportunities for Microsoft and Svolder AB
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and Svolder is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Svolder AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svolder 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 Svolder AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Svolder AB has no effect on the direction of Microsoft i.e., Microsoft and Svolder AB go up and down completely randomly.
Pair Corralation between Microsoft and Svolder AB
Given the investment horizon of 90 days Microsoft is expected to generate 0.8 times more return on investment than Svolder AB. However, Microsoft is 1.25 times less risky than Svolder AB. It trades about 0.08 of its potential returns per unit of risk. Svolder AB is currently generating about 0.0 per unit of risk. If you would invest 25,277 in Microsoft on September 3, 2024 and sell it today you would earn a total of 17,069 from holding Microsoft or generate 67.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Microsoft vs. Svolder AB
Performance |
| Timeline |
| Microsoft |
| Svolder AB |
Microsoft and Svolder AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Svolder AB
The main advantage of trading using opposite Microsoft and Svolder AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Svolder AB 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 Svolder AB will offset losses from the drop in Svolder AB's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Svolder AB vs. Investment AB Latour | Svolder AB vs. Bure Equity AB | Svolder AB vs. Kinnevik Investment AB | Svolder AB vs. Industrivarden AB ser |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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