Correlation Between Microsoft and Hvidbjerg Bank

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

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

Diversification Opportunities for Microsoft and Hvidbjerg Bank

0.39

Correlation Coefficient

Microsoft  Hvidbjerg Bank

Weak diversification

The 3 months correlation between Microsoft and Hvidbjerg is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Hvidbjerg Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hvidbjerg Bank 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 Hvidbjerg Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hvidbjerg Bank has no effect on the direction of Microsoft i.e., Microsoft and Hvidbjerg Bank go up and down completely randomly.

Pair Corralation between Microsoft and Hvidbjerg Bank

Given the investment horizon of 90 days Microsoft is expected to generate 1.28 times less return on investment than Hvidbjerg Bank. In addition to that, Microsoft is 1.12 times more volatile than Hvidbjerg Bank. It trades about 0.06 of its total potential returns per unit of risk. Hvidbjerg Bank is currently generating about 0.09 per unit of volatility. If you would invest  11,500  in Hvidbjerg Bank on September 14, 2024 and sell it today you would earn a total of  700.00  from holding Hvidbjerg Bank or generate 6.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Microsoft  vs.  Hvidbjerg Bank

Microsoft

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 4 (%) 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.

Hvidbjerg Bank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hvidbjerg Bank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Hvidbjerg Bank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Microsoft and Hvidbjerg Bank

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

The idea behind Microsoft and Hvidbjerg Bank 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.