Correlation Between Microsoft and Sydbank AS
Can any of the company-specific risk be diversified away by investing in both Microsoft and Sydbank AS 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 Sydbank AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Sydbank AS, you can compare the effects of market volatilities on Microsoft and Sydbank AS 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 Sydbank AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Sydbank AS.
Diversification Opportunities for Microsoft and Sydbank AS
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Sydbank is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Sydbank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank AS 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 Sydbank AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank AS has no effect on the direction of Microsoft i.e., Microsoft and Sydbank AS go up and down completely randomly.
Pair Corralation between Microsoft and Sydbank AS
Given the investment horizon of 90 days Microsoft is expected to under-perform the Sydbank AS. In addition to that, Microsoft is 1.75 times more volatile than Sydbank AS. It trades about -0.07 of its total potential returns per unit of risk. Sydbank AS is currently generating about 0.33 per unit of volatility. If you would invest 38,260 in Sydbank AS on November 22, 2024 and sell it today you would earn a total of 3,180 from holding Sydbank AS or generate 8.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. Sydbank AS
Performance |
| Timeline |
| Microsoft |
| Sydbank AS |
Microsoft and Sydbank AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Sydbank AS
The main advantage of trading using opposite Microsoft and Sydbank AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Sydbank AS 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 Sydbank AS will offset losses from the drop in Sydbank AS's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Sydbank AS vs. Jyske Bank AS | Sydbank AS vs. Tryg AS | Sydbank AS vs. FLSmidth Co | Sydbank AS vs. Nordea Bank Abp |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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