Correlation Between Microsoft and Wallbox NV

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Can any of the company-specific risk be diversified away by investing in both Microsoft and Wallbox NV 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 Wallbox NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Wallbox NV WT, you can compare the effects of market volatilities on Microsoft and Wallbox NV 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 Wallbox NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Wallbox NV.

Diversification Opportunities for Microsoft and Wallbox NV

MicrosoftWallboxDiversified AwayMicrosoftWallboxDiversified Away100%
-0.02
  Correlation Coefficient

Good diversification

The 3 months correlation between Microsoft and Wallbox is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Wallbox NV WT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wallbox NV WT 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 Wallbox NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wallbox NV WT has no effect on the direction of Microsoft i.e., Microsoft and Wallbox NV go up and down completely randomly.

Pair Corralation between Microsoft and Wallbox NV

Given the investment horizon of 90 days Microsoft is expected to generate 22.2 times less return on investment than Wallbox NV. But when comparing it to its historical volatility, Microsoft is 22.52 times less risky than Wallbox NV. It trades about 0.05 of its potential returns per unit of risk. Wallbox NV WT is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  8.48  in Wallbox NV WT on October 7, 2024 and sell it today you would lose (5.48) from holding Wallbox NV WT or give up 64.62% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy79.37%
ValuesDaily Returns

Microsoft  vs.  Wallbox NV WT

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 050100150200250300
JavaScript chart by amCharts 3.21.15MSFT WBX-WT
       Timeline  
Microsoft 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 3 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan410420430440450
Wallbox NV WT 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Wallbox NV WT are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Wallbox NV unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecJanNovDecJan0.020.040.060.080.10.120.14

Microsoft and Wallbox NV Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.14-3.1-2.06-1.020.01.012.063.14.155.2 0.050.100.150.20
JavaScript chart by amCharts 3.21.15MSFT WBX-WT
       Returns  

Pair Trading with Microsoft and Wallbox NV

The main advantage of trading using opposite Microsoft and Wallbox NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Wallbox NV 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 Wallbox NV will offset losses from the drop in Wallbox NV's long position.
The idea behind Microsoft and Wallbox NV WT 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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