Correlation Between SAFETY MEDICAL and Microsoft
Can any of the company-specific risk be diversified away by investing in both SAFETY MEDICAL 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 SAFETY MEDICAL and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAFETY MEDICAL PROD and Microsoft, you can compare the effects of market volatilities on SAFETY MEDICAL 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 SAFETY MEDICAL with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAFETY MEDICAL and Microsoft.
Diversification Opportunities for SAFETY MEDICAL and Microsoft
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SAFETY and Microsoft is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding SAFETY MEDICAL PROD and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and SAFETY MEDICAL 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 SAFETY MEDICAL PROD 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 SAFETY MEDICAL i.e., SAFETY MEDICAL and Microsoft go up and down completely randomly.
Pair Corralation between SAFETY MEDICAL and Microsoft
Assuming the 90 days trading horizon SAFETY MEDICAL PROD is expected to under-perform the Microsoft. In addition to that, SAFETY MEDICAL is 2.69 times more volatile than Microsoft. It trades about -0.25 of its total potential returns per unit of risk. Microsoft is currently generating about 0.23 per unit of volatility. If you would invest 37,516 in Microsoft on September 1, 2024 and sell it today you would earn a total of 2,474 from holding Microsoft or generate 6.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAFETY MEDICAL PROD vs. Microsoft
Performance |
| Timeline |
| SAFETY MEDICAL PROD |
| Microsoft |
SAFETY MEDICAL and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAFETY MEDICAL and Microsoft
The main advantage of trading using opposite SAFETY MEDICAL and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAFETY MEDICAL 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.| SAFETY MEDICAL vs. MOLSON RS BEVERAGE | SAFETY MEDICAL vs. Molson Coors Beverage | SAFETY MEDICAL vs. ADRIATIC METALS LS 013355 | SAFETY MEDICAL vs. United Insurance Holdings |
| Microsoft vs. SIMS METAL MGT | Microsoft vs. INDOFOOD AGRI RES | Microsoft vs. Astral Foods Limited | Microsoft vs. PT Indofood Sukses |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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