Correlation Between Vishay Intertechnology and Microsoft
Can any of the company-specific risk be diversified away by investing in both Vishay Intertechnology 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 Vishay Intertechnology and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vishay Intertechnology and Microsoft, you can compare the effects of market volatilities on Vishay Intertechnology 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 Vishay Intertechnology with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vishay Intertechnology and Microsoft.
Diversification Opportunities for Vishay Intertechnology and Microsoft
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vishay and Microsoft is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Intertechnology and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Vishay Intertechnology 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 Vishay Intertechnology 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 Vishay Intertechnology i.e., Vishay Intertechnology and Microsoft go up and down completely randomly.
Pair Corralation between Vishay Intertechnology and Microsoft
Assuming the 90 days trading horizon Vishay Intertechnology is expected to under-perform the Microsoft. In addition to that, Vishay Intertechnology is 2.07 times more volatile than Microsoft. It trades about -0.1 of its total potential returns per unit of risk. Microsoft is currently generating about 0.05 per unit of volatility. If you would invest 41,915 in Microsoft on October 28, 2024 and sell it today you would earn a total of 420.00 from holding Microsoft or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vishay Intertechnology vs. Microsoft
Performance |
| Timeline |
| Vishay Intertechnology |
| Microsoft |
Vishay Intertechnology and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vishay Intertechnology and Microsoft
The main advantage of trading using opposite Vishay Intertechnology and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vishay Intertechnology 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.| Vishay Intertechnology vs. MOLSON RS BEVERAGE | Vishay Intertechnology vs. PURE FOODS TASMANIA | Vishay Intertechnology vs. Grupo Carso SAB | Vishay Intertechnology vs. THAI BEVERAGE |
| Microsoft vs. International Consolidated Airlines | Microsoft vs. AEGEAN AIRLINES | Microsoft vs. SINGAPORE AIRLINES | Microsoft vs. American Airlines Group |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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