Correlation Between Microsoft and Beyond Air
Can any of the company-specific risk be diversified away by investing in both Microsoft and Beyond Air 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 Beyond Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Beyond Air, you can compare the effects of market volatilities on Microsoft and Beyond Air 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 Beyond Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Beyond Air.
Diversification Opportunities for Microsoft and Beyond Air
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Beyond is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Beyond Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Air 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 Beyond Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Air has no effect on the direction of Microsoft i.e., Microsoft and Beyond Air go up and down completely randomly.
Pair Corralation between Microsoft and Beyond Air
Given the investment horizon of 90 days Microsoft is expected to under-perform the Beyond Air. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 2.61 times less risky than Beyond Air. The stock trades about -0.04 of its potential returns per unit of risk. The Beyond Air is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 38.00 in Beyond Air on November 9, 2024 and sell it today you would earn a total of 2.00 from holding Beyond Air or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Beyond Air
Performance |
| Timeline |
| Microsoft |
| Beyond Air |
Microsoft and Beyond Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Beyond Air
The main advantage of trading using opposite Microsoft and Beyond Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Beyond Air 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 Beyond Air will offset losses from the drop in Beyond Air's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Beyond Air vs. Lucid Diagnostics | Beyond Air vs. Inari Medical | Beyond Air vs. PAVmed Series Z | Beyond Air vs. Clearpoint Neuro |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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