Correlation Between METISA Metalrgica and Microsoft
Can any of the company-specific risk be diversified away by investing in both METISA Metalrgica and Microsoft 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 METISA Metalrgica and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between METISA Metalrgica Timboense and Microsoft, you can compare the effects of market volatilities on METISA Metalrgica and Microsoft 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 METISA Metalrgica with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of METISA Metalrgica and Microsoft.
Diversification Opportunities for METISA Metalrgica and Microsoft
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between METISA and Microsoft is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and METISA Metalrgica 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 METISA Metalrgica Timboense are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of METISA Metalrgica i.e., METISA Metalrgica and Microsoft go up and down completely randomly.
Pair Corralation between METISA Metalrgica and Microsoft
Assuming the 90 days trading horizon METISA Metalrgica Timboense is expected to under-perform the Microsoft. In addition to that, METISA Metalrgica is 1.37 times more volatile than Microsoft. It trades about -0.06 of its total potential returns per unit of risk. Microsoft is currently generating about 0.08 per unit of volatility. If you would invest 9,154 in Microsoft on September 2, 2024 and sell it today you would earn a total of 1,340 from holding Microsoft or generate 14.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
METISA Metalrgica Timboense vs. Microsoft
Performance |
| Timeline |
| METISA Metalrgica |
| Microsoft |
METISA Metalrgica and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with METISA Metalrgica and Microsoft
The main advantage of trading using opposite METISA Metalrgica and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METISA Metalrgica position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| METISA Metalrgica vs. Fras le SA | METISA Metalrgica vs. PBG SA | METISA Metalrgica vs. Springs Global Participaes | METISA Metalrgica vs. Indstrias Romi SA |
| Microsoft vs. Marfrig Global Foods | Microsoft vs. American Airlines Group | Microsoft vs. Monster Beverage | Microsoft vs. Credit Acceptance |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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