Correlation Between Microsoft and Fast Ejendom
Can any of the company-specific risk be diversified away by investing in both Microsoft and Fast Ejendom 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 Fast Ejendom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Fast Ejendom, you can compare the effects of market volatilities on Microsoft and Fast Ejendom 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 Fast Ejendom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Fast Ejendom.
Diversification Opportunities for Microsoft and Fast Ejendom
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Fast is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Fast Ejendom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Ejendom 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 Fast Ejendom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Ejendom has no effect on the direction of Microsoft i.e., Microsoft and Fast Ejendom go up and down completely randomly.
Pair Corralation between Microsoft and Fast Ejendom
Given the investment horizon of 90 days Microsoft is expected to under-perform the Fast Ejendom. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 2.17 times less risky than Fast Ejendom. The stock trades about -0.14 of its potential returns per unit of risk. The Fast Ejendom is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 11,500 in Fast Ejendom on January 26, 2024 and sell it today you would lose (300.00) from holding Fast Ejendom or give up 2.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Microsoft vs. Fast Ejendom
Performance |
| Timeline |
| Microsoft |
| Fast Ejendom |
Microsoft and Fast Ejendom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Fast Ejendom
The main advantage of trading using opposite Microsoft and Fast Ejendom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Fast Ejendom 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 Fast Ejendom will offset losses from the drop in Fast Ejendom's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Fast Ejendom vs. SKAKO AS | Fast Ejendom vs. Agat Ejendomme AS | Fast Ejendom vs. Prime Office AS | Fast Ejendom vs. Cemat AS |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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