Correlation Between MicroStrategy Incorporated and S A P
Can any of the company-specific risk be diversified away by investing in both MicroStrategy Incorporated and S A P 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 MicroStrategy Incorporated and S A P into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroStrategy Incorporated and SAP SE ADR, you can compare the effects of market volatilities on MicroStrategy Incorporated and S A P 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 MicroStrategy Incorporated with a short position of S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroStrategy Incorporated and S A P.
Diversification Opportunities for MicroStrategy Incorporated and S A P
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MicroStrategy and SAP is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding MicroStrategy Incorporated and SAP SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE ADR and MicroStrategy Incorporated 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 MicroStrategy Incorporated are associated (or correlated) with S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE ADR has no effect on the direction of MicroStrategy Incorporated i.e., MicroStrategy Incorporated and S A P go up and down completely randomly.
Pair Corralation between MicroStrategy Incorporated and S A P
Given the investment horizon of 90 days MicroStrategy Incorporated is expected to generate 6.41 times more return on investment than S A P. However, MicroStrategy Incorporated is 6.41 times more volatile than SAP SE ADR. It trades about 0.29 of its potential returns per unit of risk. SAP SE ADR is currently generating about -0.09 per unit of risk. If you would invest 25,534 in MicroStrategy Incorporated on August 28, 2024 and sell it today you would earn a total of 14,811 from holding MicroStrategy Incorporated or generate 58.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroStrategy Incorporated vs. SAP SE ADR
Performance |
| Timeline |
| MicroStrategy Incorporated |
| SAP SE ADR |
MicroStrategy Incorporated and S A P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroStrategy Incorporated and S A P
The main advantage of trading using opposite MicroStrategy Incorporated and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroStrategy Incorporated position performs unexpectedly, S A P 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 S A P will offset losses from the drop in S A P's long position.| MicroStrategy Incorporated vs. Autodesk | MicroStrategy Incorporated vs. Intuit Inc | MicroStrategy Incorporated vs. Zoom Video Communications | MicroStrategy Incorporated vs. Snowflake |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |