Correlation Between Microsoft and Borussia Dortmund
Can any of the company-specific risk be diversified away by investing in both Microsoft and Borussia Dortmund 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 Borussia Dortmund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Borussia Dortmund GmbH, you can compare the effects of market volatilities on Microsoft and Borussia Dortmund 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 Borussia Dortmund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Borussia Dortmund.
Diversification Opportunities for Microsoft and Borussia Dortmund
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Borussia is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Borussia Dortmund GmbH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borussia Dortmund GmbH 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 Borussia Dortmund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borussia Dortmund GmbH has no effect on the direction of Microsoft i.e., Microsoft and Borussia Dortmund go up and down completely randomly.
Pair Corralation between Microsoft and Borussia Dortmund
Assuming the 90 days trading horizon Microsoft is expected to generate 5.28 times less return on investment than Borussia Dortmund. But when comparing it to its historical volatility, Microsoft is 1.69 times less risky than Borussia Dortmund. It trades about 0.03 of its potential returns per unit of risk. Borussia Dortmund GmbH is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 339.00 in Borussia Dortmund GmbH on January 29, 2024 and sell it today you would earn a total of 31.00 from holding Borussia Dortmund GmbH or generate 9.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Microsoft vs. Borussia Dortmund GmbH
Performance |
Timeline |
Microsoft |
Borussia Dortmund GmbH |
Microsoft and Borussia Dortmund Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and Borussia Dortmund
The main advantage of trading using opposite Microsoft and Borussia Dortmund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Borussia Dortmund 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 Borussia Dortmund will offset losses from the drop in Borussia Dortmund's long position.Microsoft vs. Datang International Power | Microsoft vs. Science Applications International | Microsoft vs. MICRONIC MYDATA | Microsoft vs. PennantPark Investment |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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