Correlation Between Vastned Retail and Microsoft

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

By analyzing existing cross correlation between Vastned Retail NV and Microsoft, you can compare the effects of market volatilities on Vastned Retail and Microsoft 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 Vastned Retail with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vastned Retail and Microsoft.

Diversification Opportunities for Vastned Retail and Microsoft

-0.41

Correlation Coefficient

Vastned Retail  Microsoft

Very good diversification

The 3 months correlation between Vastned and Microsoft is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Vastned Retail NV and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Vastned Retail 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 Vastned Retail NV are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Vastned Retail i.e., Vastned Retail and Microsoft go up and down completely randomly.

Pair Corralation between Vastned Retail and Microsoft

Assuming the 90 days horizon Vastned Retail NV is expected to under-perform the Microsoft. But the stock apears to be less risky and, when comparing its historical volatility, Vastned Retail NV is 1.57 times less risky than Microsoft. The stock trades about -0.09 of its potential returns per unit of risk. The Microsoft is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  38,818  in Microsoft on September 22, 2024 and sell it today you would earn a total of  3,312  from holding Microsoft or generate 8.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Vastned Retail NV  vs.  Microsoft

Vastned Retail NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vastned Retail NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vastned Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Microsoft

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Vastned Retail and Microsoft

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

The idea behind Vastned Retail NV and Microsoft 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.