Correlation Between Microsoft and Vishay Precision
Can any of the company-specific risk be diversified away by investing in both Microsoft and Vishay Precision 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 Vishay Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Vishay Precision Group, you can compare the effects of market volatilities on Microsoft and Vishay Precision 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 Vishay Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Vishay Precision.
Diversification Opportunities for Microsoft and Vishay Precision
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Vishay is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Vishay Precision Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Precision 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 Vishay Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Precision has no effect on the direction of Microsoft i.e., Microsoft and Vishay Precision go up and down completely randomly.
Pair Corralation between Microsoft and Vishay Precision
Given the investment horizon of 90 days Microsoft is expected to generate 0.67 times more return on investment than Vishay Precision. However, Microsoft is 1.5 times less risky than Vishay Precision. It trades about -0.02 of its potential returns per unit of risk. Vishay Precision Group is currently generating about -0.13 per unit of risk. If you would invest 42,944 in Microsoft on August 30, 2024 and sell it today you would lose (645.00) from holding Microsoft or give up 1.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Vishay Precision Group
Performance |
| Timeline |
| Microsoft |
| Vishay Precision |
Microsoft and Vishay Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Vishay Precision
The main advantage of trading using opposite Microsoft and Vishay Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Vishay Precision 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 Vishay Precision will offset losses from the drop in Vishay Precision's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Vishay Precision vs. Coherent | Vishay Precision vs. ESCO Technologies | Vishay Precision vs. Mesa Laboratories | Vishay Precision vs. Sensata Technologies 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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