Correlation Between Microsoft and Elbit Med
Can any of the company-specific risk be diversified away by investing in both Microsoft and Elbit Med 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 Microsoft and Elbit Med into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Elbit Med Tech, you can compare the effects of market volatilities on Microsoft and Elbit Med 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 Microsoft with a short position of Elbit Med. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Elbit Med.
Diversification Opportunities for Microsoft and Elbit Med
Modest diversification
The 3 months correlation between Microsoft and Elbit is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Elbit Med Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Med Tech and Microsoft 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 Microsoft are associated (or correlated) with Elbit Med. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Med Tech has no effect on the direction of Microsoft i.e., Microsoft and Elbit Med go up and down completely randomly.
Pair Corralation between Microsoft and Elbit Med
Given the investment horizon of 90 days Microsoft is expected to generate 0.13 times more return on investment than Elbit Med. However, Microsoft is 7.54 times less risky than Elbit Med. It trades about 0.03 of its potential returns per unit of risk. Elbit Med Tech is currently generating about -0.04 per unit of risk. If you would invest 40,557 in Microsoft on February 13, 2024 and sell it today you would earn a total of 917.00 from holding Microsoft or generate 2.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 76.19% |
Values | Daily Returns |
Microsoft vs. Elbit Med Tech
Performance |
Timeline |
Microsoft |
Elbit Med Tech |
Microsoft and Elbit Med Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and Elbit Med
The main advantage of trading using opposite Microsoft and Elbit Med positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Elbit Med 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 Elbit Med will offset losses from the drop in Elbit Med's long position.Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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