Correlation Between Phibro Animal and Microsoft
Can any of the company-specific risk be diversified away by investing in both Phibro Animal 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 Phibro Animal and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phibro Animal Health and Microsoft, you can compare the effects of market volatilities on Phibro Animal 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 Phibro Animal with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phibro Animal and Microsoft.
Diversification Opportunities for Phibro Animal and Microsoft
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Phibro and Microsoft is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Phibro Animal Health and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Phibro Animal 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 Phibro Animal Health 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 Phibro Animal i.e., Phibro Animal and Microsoft go up and down completely randomly.
Pair Corralation between Phibro Animal and Microsoft
Assuming the 90 days horizon Phibro Animal is expected to generate 1.12 times less return on investment than Microsoft. In addition to that, Phibro Animal is 2.15 times more volatile than Microsoft. It trades about 0.04 of its total potential returns per unit of risk. Microsoft is currently generating about 0.09 per unit of volatility. If you would invest 23,226 in Microsoft on October 16, 2024 and sell it today you would earn a total of 17,379 from holding Microsoft or generate 74.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Phibro Animal Health vs. Microsoft
Performance |
| Timeline |
| Phibro Animal Health |
| Microsoft |
Phibro Animal and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phibro Animal and Microsoft
The main advantage of trading using opposite Phibro Animal and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phibro Animal 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.| Phibro Animal vs. Tower Semiconductor | Phibro Animal vs. Thai Beverage Public | Phibro Animal vs. China Resources Beer | Phibro Animal vs. Taiwan Semiconductor Manufacturing |
| Microsoft vs. PURETECH HEALTH PLC | Microsoft vs. WESANA HEALTH HOLD | Microsoft vs. Phibro Animal Health | Microsoft vs. CarsalesCom |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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