Correlation Between Microsoft and Inbar Group

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

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

Diversification Opportunities for Microsoft and Inbar Group

-0.65

Correlation Coefficient

Microsoft  Inbar Group

Excellent diversification

The 3 months correlation between Microsoft and Inbar is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Inbar Group Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inbar Group Finance 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 Inbar Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inbar Group Finance has no effect on the direction of Microsoft i.e., Microsoft and Inbar Group go up and down completely randomly.

Pair Corralation between Microsoft and Inbar Group

Given the investment horizon of 90 days Microsoft is expected to under-perform the Inbar Group. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 10.11 times less risky than Inbar Group. The stock trades about -0.08 of its potential returns per unit of risk. The Inbar Group Finance is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  33,190  in Inbar Group Finance on December 1, 2024 and sell it today you would earn a total of  35,040  from holding Inbar Group Finance or generate 105.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	86.67%
Values	Daily Returns

Microsoft  vs.  Inbar Group Finance

Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Inbar Group Finance

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inbar Group Finance are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Inbar Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and Inbar Group

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

The idea behind Microsoft and Inbar Group Finance 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.