Correlation Between Microsoft and Sysco Corp

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

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

Diversification Opportunities for Microsoft and Sysco Corp

0.61

Correlation Coefficient

Microsoft  Sysco Corp

Poor diversification

The 3 months correlation between Microsoft and Sysco is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Sysco Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sysco Corp 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 Sysco Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sysco Corp has no effect on the direction of Microsoft i.e., Microsoft and Sysco Corp go up and down completely randomly.

Pair Corralation between Microsoft and Sysco Corp

Assuming the 90 days trading horizon Microsoft is expected to under-perform the Sysco Corp. In addition to that, Microsoft is 1.0 times more volatile than Sysco Corp. It trades about -0.15 of its total potential returns per unit of risk. Sysco Corp is currently generating about -0.09 per unit of volatility. If you would invest  7,224  in Sysco Corp on December 23, 2024 and sell it today you would lose (685.00) from holding Sysco Corp or give up 9.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Microsoft  vs.  Sysco Corp

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 fragile performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Sysco Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sysco Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic 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 Microsoft and Sysco Corp

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

The idea behind Microsoft and Sysco Corp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.