Correlation Between Microsoft and Bankinvest Danske

Can any of the company-specific risk be diversified away by investing in both Microsoft and Bankinvest Danske 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 Bankinvest Danske into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Microsoft and Bankinvest Danske, you can compare the effects of market volatilities on Microsoft and Bankinvest Danske 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 Bankinvest Danske. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Bankinvest Danske.

Diversification Opportunities for Microsoft and Bankinvest Danske

0.68

Correlation Coefficient

Microsoft  Bankinvest Danske

Poor diversification

The 3 months correlation between Microsoft and Bankinvest is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Bankinvest Danske in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankinvest Danske 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 Bankinvest Danske. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankinvest Danske has no effect on the direction of Microsoft i.e., Microsoft and Bankinvest Danske go up and down completely randomly.

Pair Corralation between Microsoft and Bankinvest Danske

Given the investment horizon of 90 days Microsoft is expected to under-perform the Bankinvest Danske. In addition to that, Microsoft is 1.64 times more volatile than Bankinvest Danske. It trades about -0.14 of its total potential returns per unit of risk. Bankinvest Danske is currently generating about -0.05 per unit of volatility. If you would invest  22,280  in Bankinvest Danske on January 26, 2024 and sell it today you would lose (150.00) from holding Bankinvest Danske or give up 0.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.48%
Values	Daily Returns

Microsoft  vs.  Bankinvest Danske

Microsoft

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Bankinvest Danske

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bankinvest Danske are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong forward-looking signals, Bankinvest Danske is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Microsoft and Bankinvest Danske

The main advantage of trading using opposite Microsoft and Bankinvest Danske positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Bankinvest Danske 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 Bankinvest Danske will offset losses from the drop in Bankinvest Danske's long position.

The idea behind Microsoft and Bankinvest Danske pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.