Correlation Between Corporate Travel and Microsoft
Can any of the company-specific risk be diversified away by investing in both Corporate Travel and Microsoft 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 Corporate Travel and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Travel Management and Microsoft, you can compare the effects of market volatilities on Corporate Travel and Microsoft 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 Corporate Travel with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Travel and Microsoft.
Diversification Opportunities for Corporate Travel and Microsoft
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Corporate and Microsoft is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Travel Management and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Corporate Travel 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 Corporate Travel Management are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Corporate Travel i.e., Corporate Travel and Microsoft go up and down completely randomly.
Pair Corralation between Corporate Travel and Microsoft
Assuming the 90 days trading horizon Corporate Travel is expected to generate 6.62 times less return on investment than Microsoft. In addition to that, Corporate Travel is 1.72 times more volatile than Microsoft. It trades about 0.01 of its total potential returns per unit of risk. Microsoft is currently generating about 0.1 per unit of volatility. If you would invest 22,114 in Microsoft on September 14, 2024 and sell it today you would earn a total of 20,536 from holding Microsoft or generate 92.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Corporate Travel Management vs. Microsoft
Performance |
Timeline |
Corporate Travel Man |
Microsoft |
Corporate Travel and Microsoft Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Corporate Travel and Microsoft
The main advantage of trading using opposite Corporate Travel and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Travel position performs unexpectedly, Microsoft 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 will offset losses from the drop in Microsoft's long position.Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc | Corporate Travel vs. Apple Inc |
Microsoft vs. AGF Management Limited | Microsoft vs. G8 EDUCATION | Microsoft vs. Corporate Travel Management | Microsoft vs. CEOTRONICS |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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