Correlation Between Microsoft and BB Renda

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

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

Diversification Opportunities for Microsoft and BB Renda

-0.46

Correlation Coefficient

Microsoft  BB Renda

Very good diversification

The 3 months correlation between Microsoft and BBRC11 is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and BB Renda Corporativa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BB Renda Corporativa 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 BB Renda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BB Renda Corporativa has no effect on the direction of Microsoft i.e., Microsoft and BB Renda go up and down completely randomly.

Pair Corralation between Microsoft and BB Renda

Given the investment horizon of 90 days Microsoft is expected to generate 0.62 times more return on investment than BB Renda. However, Microsoft is 1.62 times less risky than BB Renda. It trades about 0.09 of its potential returns per unit of risk. BB Renda Corporativa is currently generating about 0.04 per unit of risk. If you would invest  23,647  in Microsoft on October 7, 2024 and sell it today you would earn a total of  18,688  from holding Microsoft or generate 79.03% return on investment over 90 days.

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

Microsoft  vs.  BB Renda Corporativa

Microsoft

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

BB Renda Corporativa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BB Renda Corporativa has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Microsoft and BB Renda

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

The idea behind Microsoft and BB Renda Corporativa 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.