Correlation Between Microsoft and TGS-NOPEC GEOPHYSIC
Can any of the company-specific risk be diversified away by investing in both Microsoft and TGS-NOPEC GEOPHYSIC 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 TGS-NOPEC GEOPHYSIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and TGS NOPEC GEOPHYSIC, you can compare the effects of market volatilities on Microsoft and TGS-NOPEC GEOPHYSIC 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 TGS-NOPEC GEOPHYSIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and TGS-NOPEC GEOPHYSIC.
Diversification Opportunities for Microsoft and TGS-NOPEC GEOPHYSIC
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and TGS-NOPEC is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and TGS NOPEC GEOPHYSIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TGS NOPEC GEOPHYSIC 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 TGS-NOPEC GEOPHYSIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TGS NOPEC GEOPHYSIC has no effect on the direction of Microsoft i.e., Microsoft and TGS-NOPEC GEOPHYSIC go up and down completely randomly.
Pair Corralation between Microsoft and TGS-NOPEC GEOPHYSIC
Given the investment horizon of 90 days Microsoft is expected to under-perform the TGS-NOPEC GEOPHYSIC. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 2.12 times less risky than TGS-NOPEC GEOPHYSIC. The stock trades about -0.04 of its potential returns per unit of risk. The TGS NOPEC GEOPHYSIC is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 716.00 in TGS NOPEC GEOPHYSIC on August 31, 2024 and sell it today you would earn a total of 216.00 from holding TGS NOPEC GEOPHYSIC or generate 30.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Microsoft vs. TGS NOPEC GEOPHYSIC
Performance |
| Timeline |
| Microsoft |
| TGS NOPEC GEOPHYSIC |
Microsoft and TGS-NOPEC GEOPHYSIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and TGS-NOPEC GEOPHYSIC
The main advantage of trading using opposite Microsoft and TGS-NOPEC GEOPHYSIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, TGS-NOPEC GEOPHYSIC 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 TGS-NOPEC GEOPHYSIC will offset losses from the drop in TGS-NOPEC GEOPHYSIC's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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