Correlation Between Microsoft and Brp

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

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

Diversification Opportunities for Microsoft and Brp

0.21

Correlation Coefficient

Microsoft  Brp

Modest diversification

The 3 months correlation between Microsoft and Brp is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Brp Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brp Group 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 Brp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brp Group has no effect on the direction of Microsoft i.e., Microsoft and Brp go up and down completely randomly.

Pair Corralation between Microsoft and Brp

If you would invest  37,145  in Microsoft on October 3, 2024 and sell it today you would earn a total of  5,338  from holding Microsoft or generate 14.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.37%
Values	Daily Returns

Microsoft  vs.  Brp Group

Microsoft

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 2 (%) 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.

Brp Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brp Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Brp is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Microsoft and Brp

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

The idea behind Microsoft and Brp Group 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.