Correlation Between FuelCell Energy and Microsoft
Can any of the company-specific risk be diversified away by investing in both FuelCell Energy 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 FuelCell Energy and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FuelCell Energy and Microsoft, you can compare the effects of market volatilities on FuelCell Energy 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 FuelCell Energy with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of FuelCell Energy and Microsoft.
Diversification Opportunities for FuelCell Energy and Microsoft
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FuelCell and Microsoft is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding FuelCell Energy and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and FuelCell Energy 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 FuelCell Energy 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 FuelCell Energy i.e., FuelCell Energy and Microsoft go up and down completely randomly.
Pair Corralation between FuelCell Energy and Microsoft
Assuming the 90 days trading horizon FuelCell Energy is expected to under-perform the Microsoft. In addition to that, FuelCell Energy is 3.95 times more volatile than Microsoft. It trades about -0.04 of its total potential returns per unit of risk. Microsoft is currently generating about 0.09 per unit of volatility. If you would invest 22,571 in Microsoft on September 23, 2024 and sell it today you would earn a total of 18,999 from holding Microsoft or generate 84.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 99.8% |
Values | Daily Returns |
FuelCell Energy vs. Microsoft
Performance |
Timeline |
FuelCell Energy |
Microsoft |
FuelCell Energy and Microsoft Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FuelCell Energy and Microsoft
The main advantage of trading using opposite FuelCell Energy and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FuelCell Energy 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.FuelCell Energy vs. BRIT AMER TOBACCO | FuelCell Energy vs. Casio Computer CoLtd | FuelCell Energy vs. Align Technology | FuelCell Energy vs. DXC Technology Co |
Microsoft vs. Universal Entertainment | Microsoft vs. NIPPON MEAT PACKERS | Microsoft vs. Performance Food Group | Microsoft vs. CNVISION MEDIA |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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