Correlation Between Microsoft and Bottomline Technologies
Can any of the company-specific risk be diversified away by investing in both Microsoft and Bottomline Technologies 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 Bottomline Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Bottomline Technologies, you can compare the effects of market volatilities on Microsoft and Bottomline Technologies 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 Bottomline Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Bottomline Technologies.
Diversification Opportunities for Microsoft and Bottomline Technologies
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microsoft and Bottomline is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Bottomline Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bottomline Technologies 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 Bottomline Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bottomline Technologies has no effect on the direction of Microsoft i.e., Microsoft and Bottomline Technologies go up and down completely randomly.
Pair Corralation between Microsoft and Bottomline Technologies
If you would invest 33,635 in Microsoft on January 24, 2024 and sell it today you would earn a total of 6,461 from holding Microsoft or generate 19.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 0.54% |
| Values | Daily Returns |
Microsoft vs. Bottomline Technologies
Performance |
| Timeline |
| Microsoft |
| Bottomline Technologies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Bottomline Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Bottomline Technologies
The main advantage of trading using opposite Microsoft and Bottomline Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Bottomline Technologies 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 Bottomline Technologies will offset losses from the drop in Bottomline Technologies' long position.| Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings | Microsoft vs. Cloudflare |
| Bottomline Technologies vs. NH Foods Ltd | Bottomline Technologies vs. The Coca Cola | Bottomline Technologies vs. ScanSource | Bottomline Technologies vs. Ambev SA ADR |
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 CEOs Directory module to screen CEOs from public companies around the world.
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