Correlation Between Microsoft and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Microsoft and Naked Wines 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 Naked Wines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Naked Wines Plc, you can compare the effects of market volatilities on Microsoft and Naked Wines 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 Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Naked Wines.
Diversification Opportunities for Microsoft and Naked Wines
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microsoft and Naked is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Naked Wines Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naked Wines Plc 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 Naked Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naked Wines Plc has no effect on the direction of Microsoft i.e., Microsoft and Naked Wines go up and down completely randomly.
Pair Corralation between Microsoft and Naked Wines
If you would invest (100.00) in Naked Wines Plc on January 25, 2024 and sell it today you would earn a total of 100.00 from holding Naked Wines Plc or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Microsoft vs. Naked Wines Plc
Performance |
| Timeline |
| Microsoft |
| Naked Wines Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Naked Wines
The main advantage of trading using opposite Microsoft and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Naked Wines 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 Naked Wines will offset losses from the drop in Naked Wines' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Naked Wines vs. SunOpta | Naked Wines vs. Arhaus Inc | Naked Wines vs. Where Food Comes | Naked Wines vs. Hanover Foods |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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