Correlation Between Microsoft and Telia Company
Can any of the company-specific risk be diversified away by investing in both Microsoft and Telia Company 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 Telia Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Telia Company AB, you can compare the effects of market volatilities on Microsoft and Telia Company 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 Telia Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Telia Company.
Diversification Opportunities for Microsoft and Telia Company
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Telia is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Telia Company AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telia Company 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 Telia Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telia Company has no effect on the direction of Microsoft i.e., Microsoft and Telia Company go up and down completely randomly.
Pair Corralation between Microsoft and Telia Company
If you would invest 493.00 in Telia Company AB on August 25, 2024 and sell it today you would earn a total of 0.00 from holding Telia Company AB or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Microsoft vs. Telia Company AB
Performance |
| Timeline |
| Microsoft |
| Telia Company |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Telia Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Telia Company
The main advantage of trading using opposite Microsoft and Telia Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Telia Company 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 Telia Company will offset losses from the drop in Telia Company's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Telia Company vs. MTN Group Ltd | Telia Company vs. Vodacom Group Ltd | Telia Company vs. Telenor ASA ADR | Telia Company vs. WideOpenWest |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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