Correlation Between Microsoft and Lyxor UCITS

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

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

Diversification Opportunities for Microsoft and Lyxor UCITS

-0.42

Correlation Coefficient

Microsoft  Lyxor UCITS

Very good diversification

The 3 months correlation between Microsoft and Lyxor is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Lyxor UCITS Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor UCITS Japan 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 Lyxor UCITS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor UCITS Japan has no effect on the direction of Microsoft i.e., Microsoft and Lyxor UCITS go up and down completely randomly.

Pair Corralation between Microsoft and Lyxor UCITS

Given the investment horizon of 90 days Microsoft is expected to under-perform the Lyxor UCITS. In addition to that, Microsoft is 1.88 times more volatile than Lyxor UCITS Japan. It trades about -0.08 of its total potential returns per unit of risk. Lyxor UCITS Japan is currently generating about -0.01 per unit of volatility. If you would invest  16,813  in Lyxor UCITS Japan on November 30, 2024 and sell it today you would lose (82.00) from holding Lyxor UCITS Japan or give up 0.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Microsoft  vs.  Lyxor UCITS Japan

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.

Lyxor UCITS Japan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lyxor UCITS Japan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Lyxor UCITS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Microsoft and Lyxor UCITS

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

The idea behind Microsoft and Lyxor UCITS Japan 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.