Correlation Between Microsoft and Euro Trend

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

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

Diversification Opportunities for Microsoft and Euro Trend

0.25

Correlation Coefficient

Microsoft  Euro Trend

Modest diversification

The 3 months correlation between Microsoft and Euro is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Euro Trend Yatirim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euro Trend Yatirim 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 Euro Trend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euro Trend Yatirim has no effect on the direction of Microsoft i.e., Microsoft and Euro Trend go up and down completely randomly.

Pair Corralation between Microsoft and Euro Trend

Given the investment horizon of 90 days Microsoft is expected to generate 0.49 times more return on investment than Euro Trend. However, Microsoft is 2.05 times less risky than Euro Trend. It trades about 0.03 of its potential returns per unit of risk. Euro Trend Yatirim is currently generating about -0.06 per unit of risk. If you would invest  42,831  in Microsoft on September 24, 2024 and sell it today you would earn a total of  829.00  from holding Microsoft or generate 1.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Microsoft  vs.  Euro Trend Yatirim

Microsoft

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 2 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Euro Trend Yatirim

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Euro Trend Yatirim has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Microsoft and Euro Trend

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

The idea behind Microsoft and Euro Trend Yatirim 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.