Correlation Between 054536AA5 and Microsoft Corp

By analyzing existing cross correlation between AXA SA 86 and Microsoft Corp, you can compare the effects of market volatilities on 054536AA5 and Microsoft Corp 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 054536AA5 with a short position of Microsoft Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of 054536AA5 and Microsoft Corp.

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Can any of the company-specific risk be diversified away by investing in both 054536AA5 and Microsoft Corp 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 054536AA5 and Microsoft Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for 054536AA5 and Microsoft Corp

-0.87
  Correlation Coefficient
AXA SA 86
Microsoft Corp

Pay attention - limited upside

The 3 months correlation between 054536AA5 and Microsoft is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding AXA SA 8.6% 15Dec2030 and Microsoft Corp in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Microsoft Corp and 054536AA5 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 AXA SA 86 are associated (or correlated) with Microsoft Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft Corp has no effect on the direction of 054536AA5 i.e., 054536AA5 and Microsoft Corp go up and down completely randomly.

Pair Corralation between 054536AA5 and Microsoft Corp

Assuming the 90 days trading horizon AXA SA 86 is expected to under-perform the Microsoft Corp. But the bond apears to be less risky and, when comparing its historical volatility, AXA SA 86 is 1.89 times less risky than Microsoft Corp. The bond trades about -0.08 of its potential returns per unit of risk. The Microsoft Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  24,740  in Microsoft Corp on August 30, 2021 and sell it today you would earn a total of  8,228  from holding Microsoft Corp or generate 33.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy77.17%
ValuesDaily Returns

AXA SA 8.6% 15Dec2030  vs.  Microsoft Corp

 Performance (%) 
      Timeline 
AXA SA 86 
054536AA5 Performance
0 of 100
Over the last 90 days AXA SA 86 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 054536AA5 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

054536AA5 Price Channel

Microsoft Corp 
Microsoft Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Microsoft Corp may actually be approaching a critical reversion point that can send shares even higher in December 2021.

Microsoft Price Channel

054536AA5 and Microsoft Corp Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with 054536AA5 and Microsoft Corp

The main advantage of trading using opposite 054536AA5 and Microsoft Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 054536AA5 position performs unexpectedly, Microsoft Corp 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 Microsoft Corp will offset losses from the drop in Microsoft Corp's long position.
The idea behind AXA SA 86 and Microsoft Corp 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.

Microsoft Corp

Pair trading matchups for Microsoft Corp

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 ETF Directory module to find actively traded Exchange Traded Funds (ETF) from around the world.

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