Correlation Between VIVA WINE and Microsoft

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

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

Diversification Opportunities for VIVA WINE and Microsoft

-0.44

Correlation Coefficient

VIVA WINE  Microsoft

Very good diversification

The 3 months correlation between VIVA and Microsoft is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding VIVA WINE GROUP and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and VIVA WINE 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 VIVA WINE GROUP 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 VIVA WINE i.e., VIVA WINE and Microsoft go up and down completely randomly.

Pair Corralation between VIVA WINE and Microsoft

Assuming the 90 days horizon VIVA WINE GROUP is expected to generate 3.68 times more return on investment than Microsoft. However, VIVA WINE is 3.68 times more volatile than Microsoft. It trades about 0.06 of its potential returns per unit of risk. Microsoft is currently generating about 0.08 per unit of risk. If you would invest  116.00  in VIVA WINE GROUP on December 2, 2024 and sell it today you would earn a total of  245.00  from holding VIVA WINE GROUP or generate 211.21% return on investment over 90 days.

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

VIVA WINE GROUP  vs.  Microsoft

VIVA WINE GROUP

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VIVA WINE GROUP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, VIVA WINE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 fragile 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.

Pair Trading with VIVA WINE and Microsoft

The main advantage of trading using opposite VIVA WINE and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIVA WINE 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 VIVA WINE GROUP 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.

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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.