Correlation Between STOMO MITSUI and Microsoft
Can any of the company-specific risk be diversified away by investing in both STOMO MITSUI 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 STOMO MITSUI and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STOMO MITSUI FINL and Microsoft, you can compare the effects of market volatilities on STOMO MITSUI 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 STOMO MITSUI with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of STOMO MITSUI and Microsoft.
Diversification Opportunities for STOMO MITSUI and Microsoft
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STOMO and Microsoft is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding STOMO MITSUI FINL and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and STOMO MITSUI 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 STOMO MITSUI FINL 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 STOMO MITSUI i.e., STOMO MITSUI and Microsoft go up and down completely randomly.
Pair Corralation between STOMO MITSUI and Microsoft
Assuming the 90 days trading horizon STOMO MITSUI is expected to generate 2.43 times less return on investment than Microsoft. In addition to that, STOMO MITSUI is 1.84 times more volatile than Microsoft. It trades about 0.09 of its total potential returns per unit of risk. Microsoft is currently generating about 0.42 per unit of volatility. If you would invest 39,352 in Microsoft on September 19, 2024 and sell it today you would earn a total of 3,888 from holding Microsoft or generate 9.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STOMO MITSUI FINL vs. Microsoft
Performance |
| Timeline |
| STOMO MITSUI FINL |
| Microsoft |
STOMO MITSUI and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STOMO MITSUI and Microsoft
The main advantage of trading using opposite STOMO MITSUI and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STOMO MITSUI 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.| STOMO MITSUI vs. Apple Inc | STOMO MITSUI vs. Apple Inc | STOMO MITSUI vs. Apple Inc | STOMO MITSUI vs. Apple Inc |
| Microsoft vs. Bumrungrad Hospital Public | Microsoft vs. SHIP HEALTHCARE HLDGINC | Microsoft vs. National Health Investors | Microsoft vs. Sabra Health Care |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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