Correlation Between Microsoft and Thermador Groupe
Can any of the company-specific risk be diversified away by investing in both Microsoft and Thermador Groupe 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 Thermador Groupe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Thermador Groupe SA, you can compare the effects of market volatilities on Microsoft and Thermador Groupe 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 Thermador Groupe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Thermador Groupe.
Diversification Opportunities for Microsoft and Thermador Groupe
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Thermador is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Thermador Groupe SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermador Groupe 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 Thermador Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermador Groupe has no effect on the direction of Microsoft i.e., Microsoft and Thermador Groupe go up and down completely randomly.
Pair Corralation between Microsoft and Thermador Groupe
Given the investment horizon of 90 days Microsoft is expected to generate 0.88 times more return on investment than Thermador Groupe. However, Microsoft is 1.13 times less risky than Thermador Groupe. It trades about 0.08 of its potential returns per unit of risk. Thermador Groupe SA is currently generating about -0.02 per unit of risk. If you would invest 24,616 in Microsoft on August 24, 2024 and sell it today you would earn a total of 16,632 from holding Microsoft or generate 67.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.22% |
| Values | Daily Returns |
Microsoft vs. Thermador Groupe SA
Performance |
| Timeline |
| Microsoft |
| Thermador Groupe |
Microsoft and Thermador Groupe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Thermador Groupe
The main advantage of trading using opposite Microsoft and Thermador Groupe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Thermador Groupe 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 Thermador Groupe will offset losses from the drop in Thermador Groupe's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Thermador Groupe vs. Stef SA | Thermador Groupe vs. Robertet SA | Thermador Groupe vs. Grard Perrier Industrie | Thermador Groupe vs. Aubay Socit Anonyme |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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