Correlation Between NTG Nordic and Microsoft
Can any of the company-specific risk be diversified away by investing in both NTG Nordic 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 NTG Nordic and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NTG Nordic Transport and Microsoft, you can compare the effects of market volatilities on NTG Nordic 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 NTG Nordic with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of NTG Nordic and Microsoft.
Diversification Opportunities for NTG Nordic and Microsoft
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NTG and Microsoft is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and NTG Nordic 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 NTG Nordic Transport 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 NTG Nordic i.e., NTG Nordic and Microsoft go up and down completely randomly.
Pair Corralation between NTG Nordic and Microsoft
Assuming the 90 days trading horizon NTG Nordic Transport is expected to under-perform the Microsoft. In addition to that, NTG Nordic is 1.38 times more volatile than Microsoft. It trades about -0.27 of its total potential returns per unit of risk. Microsoft is currently generating about 0.12 per unit of volatility. If you would invest 41,040 in Microsoft on October 28, 2024 and sell it today you would earn a total of 1,200 from holding Microsoft or generate 2.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NTG Nordic Transport vs. Microsoft
Performance |
| Timeline |
| NTG Nordic Transport |
| Microsoft |
NTG Nordic and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NTG Nordic and Microsoft
The main advantage of trading using opposite NTG Nordic and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NTG Nordic 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.| NTG Nordic vs. CN MODERN DAIRY | NTG Nordic vs. Austevoll Seafood ASA | NTG Nordic vs. Nomad Foods | NTG Nordic vs. Applied Materials |
| Microsoft vs. Synovus Financial Corp | Microsoft vs. H2O Retailing | Microsoft vs. Webster Financial | Microsoft vs. Direct Line Insurance |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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