Correlation Between Microsoft Corp and Boyd Group

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

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

Diversification Opportunities for Microsoft Corp and Boyd Group

-0.58

Correlation Coefficient

Microsoft Corp  Boyd Group

Excellent diversification

The 3 months correlation between Microsoft and Boyd is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp CDR and Boyd Group Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Group Services and Microsoft Corp 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 Corp CDR are associated (or correlated) with Boyd Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boyd Group Services has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and Boyd Group go up and down completely randomly.

Pair Corralation between Microsoft Corp and Boyd Group

Assuming the 90 days trading horizon Microsoft Corp CDR is expected to under-perform the Boyd Group. In addition to that, Microsoft Corp is 1.08 times more volatile than Boyd Group Services. It trades about -0.09 of its total potential returns per unit of risk. Boyd Group Services is currently generating about 0.16 per unit of volatility. If you would invest  21,350  in Boyd Group Services on December 3, 2024 and sell it today you would earn a total of  2,870  from holding Boyd Group Services or generate 13.44% return on investment over 90 days.

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

Microsoft Corp CDR  vs.  Boyd Group Services

Microsoft Corp CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft Corp CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Boyd Group Services

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Group Services are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Boyd Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft Corp and Boyd Group

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

The idea behind Microsoft Corp CDR and Boyd Group Services 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..