Correlation Between Microsoft and Vontobel Holding
Can any of the company-specific risk be diversified away by investing in both Microsoft and Vontobel Holding 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 Vontobel Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Vontobel Holding, you can compare the effects of market volatilities on Microsoft and Vontobel Holding 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 Vontobel Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Vontobel Holding.
Diversification Opportunities for Microsoft and Vontobel Holding
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Vontobel is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Vontobel Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vontobel Holding 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 Vontobel Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vontobel Holding has no effect on the direction of Microsoft i.e., Microsoft and Vontobel Holding go up and down completely randomly.
Pair Corralation between Microsoft and Vontobel Holding
Given the investment horizon of 90 days Microsoft is expected to under-perform the Vontobel Holding. In addition to that, Microsoft is 2.1 times more volatile than Vontobel Holding. It trades about -0.06 of its total potential returns per unit of risk. Vontobel Holding is currently generating about 0.22 per unit of volatility. If you would invest 6,440 in Vontobel Holding on November 5, 2024 and sell it today you would earn a total of 300.00 from holding Vontobel Holding or generate 4.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Microsoft vs. Vontobel Holding
Performance |
| Timeline |
| Microsoft |
| Vontobel Holding |
Microsoft and Vontobel Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Vontobel Holding
The main advantage of trading using opposite Microsoft and Vontobel Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Vontobel Holding 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 Vontobel Holding will offset losses from the drop in Vontobel Holding's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Vontobel Holding vs. Julius Baer Gruppe | Vontobel Holding vs. Helvetia Holding AG | Vontobel Holding vs. Sulzer AG | Vontobel Holding vs. Swiss Life Holding |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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