Correlation Between Borussia Dortmund and Microsoft
Can any of the company-specific risk be diversified away by investing in both Borussia Dortmund 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 Borussia Dortmund and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Borussia Dortmund GmbH and Microsoft, you can compare the effects of market volatilities on Borussia Dortmund 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 Borussia Dortmund with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Borussia Dortmund and Microsoft.
Diversification Opportunities for Borussia Dortmund and Microsoft
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Borussia and Microsoft is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Borussia Dortmund GmbH and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Borussia Dortmund 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 Borussia Dortmund GmbH 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 Borussia Dortmund i.e., Borussia Dortmund and Microsoft go up and down completely randomly.
Pair Corralation between Borussia Dortmund and Microsoft
Assuming the 90 days trading horizon Borussia Dortmund is expected to generate 2.75 times less return on investment than Microsoft. In addition to that, Borussia Dortmund is 1.49 times more volatile than Microsoft. It trades about 0.01 of its total potential returns per unit of risk. Microsoft is currently generating about 0.05 per unit of volatility. If you would invest 25,705 in Microsoft on January 26, 2024 and sell it today you would earn a total of 12,365 from holding Microsoft or generate 48.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Borussia Dortmund GmbH vs. Microsoft
Performance |
| Timeline |
| Borussia Dortmund GmbH |
| Microsoft |
Borussia Dortmund and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Borussia Dortmund and Microsoft
The main advantage of trading using opposite Borussia Dortmund and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Borussia Dortmund 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.| Borussia Dortmund vs. Eastman Chemical | Borussia Dortmund vs. UNIVMUSIC GRPADR050 | Borussia Dortmund vs. TIANDE CHEMICAL | Borussia Dortmund vs. Darden Restaurants |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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