Correlation Between Microsoft and Fantagio Corp

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

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

Diversification Opportunities for Microsoft and Fantagio Corp

-0.04

Correlation Coefficient

Microsoft  Fantagio Corp

Good diversification

The 3 months correlation between Microsoft and Fantagio is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Fantagio Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fantagio 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 Fantagio Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fantagio Corp has no effect on the direction of Microsoft i.e., Microsoft and Fantagio Corp go up and down completely randomly.

Pair Corralation between Microsoft and Fantagio Corp

Given the investment horizon of 90 days Microsoft is expected to under-perform the Fantagio Corp. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 5.42 times less risky than Fantagio Corp. The stock trades about -0.09 of its potential returns per unit of risk. The Fantagio Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  51,200  in Fantagio Corp on December 6, 2024 and sell it today you would earn a total of  10,100  from holding Fantagio Corp or generate 19.73% return on investment over 90 days.

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

Microsoft  vs.  Fantagio 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 latest abnormal 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.

Fantagio Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fantagio Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fantagio Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Microsoft and Fantagio Corp

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

The idea behind Microsoft and Fantagio 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.