Correlation Between Microsoft and C3 Ai

Can any of the company-specific risk be diversified away by investing in both Microsoft and C3 Ai 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 C3 Ai into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Microsoft and C3 Ai Inc, you can compare the effects of market volatilities on Microsoft and C3 Ai 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 C3 Ai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and C3 Ai.

Diversification Opportunities for Microsoft and C3 Ai

0.87

Correlation Coefficient

Microsoft  C3 Ai

Very poor diversification

The 3 months correlation between Microsoft and C3 Ai is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and C3 Ai Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C3 Ai Inc 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 C3 Ai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C3 Ai Inc has no effect on the direction of Microsoft i.e., Microsoft and C3 Ai go up and down completely randomly.

Pair Corralation between Microsoft and C3 Ai

Given the investment horizon of 90 days Microsoft is expected to generate 0.44 times more return on investment than C3 Ai. However, Microsoft is 2.29 times less risky than C3 Ai. It trades about -0.11 of its potential returns per unit of risk. C3 Ai Inc is currently generating about -0.2 per unit of risk. If you would invest  42,398  in Microsoft on December 28, 2024 and sell it today you would lose (4,518) from holding Microsoft or give up 10.66% of portfolio value over 90 days.

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

Microsoft  vs.  C3 Ai Inc

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.

C3 Ai Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days C3 Ai Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Microsoft and C3 Ai

The main advantage of trading using opposite Microsoft and C3 Ai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, C3 Ai 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 C3 Ai will offset losses from the drop in C3 Ai's long position.

The idea behind Microsoft and C3 Ai Inc 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.