Correlation Between Microsoft and Voestalpine
Can any of the company-specific risk be diversified away by investing in both Microsoft and Voestalpine 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 Voestalpine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Voestalpine AG PK, you can compare the effects of market volatilities on Microsoft and Voestalpine 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 Voestalpine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Voestalpine.
Diversification Opportunities for Microsoft and Voestalpine
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Voestalpine is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Voestalpine AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voestalpine AG PK 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 Voestalpine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voestalpine AG PK has no effect on the direction of Microsoft i.e., Microsoft and Voestalpine go up and down completely randomly.
Pair Corralation between Microsoft and Voestalpine
Given the investment horizon of 90 days Microsoft is expected to generate 0.48 times more return on investment than Voestalpine. However, Microsoft is 2.08 times less risky than Voestalpine. It trades about 0.1 of its potential returns per unit of risk. Voestalpine AG PK is currently generating about 0.0 per unit of risk. If you would invest 23,595 in Microsoft on September 20, 2024 and sell it today you would earn a total of 21,851 from holding Microsoft or generate 92.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Voestalpine AG PK
Performance |
| Timeline |
| Microsoft |
| Voestalpine AG PK |
Microsoft and Voestalpine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Voestalpine
The main advantage of trading using opposite Microsoft and Voestalpine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Voestalpine 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 Voestalpine will offset losses from the drop in Voestalpine's long position.| Microsoft vs. Global Blue Group | Microsoft vs. Aurora Mobile | Microsoft vs. Marqeta | Microsoft vs. Nextnav Acquisition Corp |
| Voestalpine vs. ArcelorMittal SA ADR | Voestalpine vs. Gerdau SA ADR | Voestalpine vs. POSCO Holdings | Voestalpine vs. HUMANA INC |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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