Correlation Between Microsoft and Prime Office
Can any of the company-specific risk be diversified away by investing in both Microsoft and Prime Office 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 Prime Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Prime Office AS, you can compare the effects of market volatilities on Microsoft and Prime Office 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 Prime Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Prime Office.
Diversification Opportunities for Microsoft and Prime Office
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Prime is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Prime Office AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Office AS 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 Prime Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Office AS has no effect on the direction of Microsoft i.e., Microsoft and Prime Office go up and down completely randomly.
Pair Corralation between Microsoft and Prime Office
Given the investment horizon of 90 days Microsoft is expected to generate 0.67 times more return on investment than Prime Office. However, Microsoft is 1.5 times less risky than Prime Office. It trades about 0.02 of its potential returns per unit of risk. Prime Office AS is currently generating about -0.06 per unit of risk. If you would invest 40,318 in Microsoft on January 26, 2024 and sell it today you would earn a total of 588.00 from holding Microsoft or generate 1.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Microsoft vs. Prime Office AS
Performance |
| Timeline |
| Microsoft |
| Prime Office AS |
Microsoft and Prime Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Prime Office
The main advantage of trading using opposite Microsoft and Prime Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Prime Office 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 Prime Office will offset losses from the drop in Prime Office's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Prime Office vs. Djurslands Bank | Prime Office vs. North Media AS | Prime Office vs. First Farms AS | Prime Office vs. Flgger group 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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