Correlation Between Microsoft and SCHNEIDER NATLINC

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

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

Diversification Opportunities for Microsoft and SCHNEIDER NATLINC

0.57

Correlation Coefficient

Microsoft  SCHNEIDER NATLINC

Very weak diversification

The 3 months correlation between Microsoft and SCHNEIDER is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and SCHNEIDER NATLINC CLB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCHNEIDER NATLINC CLB 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 SCHNEIDER NATLINC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCHNEIDER NATLINC CLB has no effect on the direction of Microsoft i.e., Microsoft and SCHNEIDER NATLINC go up and down completely randomly.

Pair Corralation between Microsoft and SCHNEIDER NATLINC

Given the investment horizon of 90 days Microsoft is expected to generate 13.94 times less return on investment than SCHNEIDER NATLINC. But when comparing it to its historical volatility, Microsoft is 1.37 times less risky than SCHNEIDER NATLINC. It trades about 0.01 of its potential returns per unit of risk. SCHNEIDER NATLINC CLB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,492  in SCHNEIDER NATLINC CLB on September 29, 2024 and sell it today you would earn a total of  268.00  from holding SCHNEIDER NATLINC CLB or generate 10.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Microsoft  vs.  SCHNEIDER NATLINC CLB

Microsoft

Risk-Adjusted Performance

0 of 100

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 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.

SCHNEIDER NATLINC CLB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCHNEIDER NATLINC CLB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, SCHNEIDER NATLINC may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Microsoft and SCHNEIDER NATLINC

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

The idea behind Microsoft and SCHNEIDER NATLINC CLB 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.