Correlation Between UmweltBank and Microsoft
Can any of the company-specific risk be diversified away by investing in both UmweltBank 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 UmweltBank and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UmweltBank AG and Microsoft, you can compare the effects of market volatilities on UmweltBank 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 UmweltBank with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of UmweltBank and Microsoft.
Diversification Opportunities for UmweltBank and Microsoft
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UmweltBank and Microsoft is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding UmweltBank AG and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and UmweltBank 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 UmweltBank AG 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 UmweltBank i.e., UmweltBank and Microsoft go up and down completely randomly.
Pair Corralation between UmweltBank and Microsoft
Assuming the 90 days trading horizon UmweltBank AG is expected to under-perform the Microsoft. But the stock apears to be less risky and, when comparing its historical volatility, UmweltBank AG is 1.31 times less risky than Microsoft. The stock trades about -0.09 of its potential returns per unit of risk. The Microsoft is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 41,105 in Microsoft on October 25, 2024 and sell it today you would earn a total of 1,395 from holding Microsoft or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UmweltBank AG vs. Microsoft
Performance |
| Timeline |
| UmweltBank AG |
| Microsoft |
UmweltBank and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UmweltBank and Microsoft
The main advantage of trading using opposite UmweltBank and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UmweltBank 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.| UmweltBank vs. MAVEN WIRELESS SWEDEN | UmweltBank vs. DATATEC LTD 2 | UmweltBank vs. Datadog | UmweltBank vs. CITY OFFICE REIT |
| Microsoft vs. National Beverage Corp | Microsoft vs. Aya Gold Silver | Microsoft vs. Zijin Mining Group | Microsoft vs. MINCO SILVER |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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