Correlation Between Microsoft and Webstep ASA
Can any of the company-specific risk be diversified away by investing in both Microsoft and Webstep ASA 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 Webstep ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Webstep ASA, you can compare the effects of market volatilities on Microsoft and Webstep ASA 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 Webstep ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Webstep ASA.
Diversification Opportunities for Microsoft and Webstep ASA
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Webstep is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Webstep ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webstep ASA 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 Webstep ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Webstep ASA has no effect on the direction of Microsoft i.e., Microsoft and Webstep ASA go up and down completely randomly.
Pair Corralation between Microsoft and Webstep ASA
Given the investment horizon of 90 days Microsoft is expected to generate 0.68 times more return on investment than Webstep ASA. However, Microsoft is 1.48 times less risky than Webstep ASA. It trades about 0.08 of its potential returns per unit of risk. Webstep ASA is currently generating about 0.03 per unit of risk. If you would invest 25,277 in Microsoft on September 3, 2024 and sell it today you would earn a total of 17,821 from holding Microsoft or generate 70.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Microsoft vs. Webstep ASA
Performance |
| Timeline |
| Microsoft |
| Webstep ASA |
Microsoft and Webstep ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Webstep ASA
The main advantage of trading using opposite Microsoft and Webstep ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Webstep ASA 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 Webstep ASA will offset losses from the drop in Webstep ASA's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Webstep ASA vs. Kitron ASA | Webstep ASA vs. Europris ASA | Webstep ASA vs. Kid ASA | Webstep ASA vs. Atea ASA |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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