Correlation Between Microsoft and Cohen Circle

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

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

Diversification Opportunities for Microsoft and Cohen Circle

-0.63

Correlation Coefficient

Microsoft  Cohen Circle

Excellent diversification

The 3 months correlation between Microsoft and Cohen is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Cohen Circle Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Circle Acquisition 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 Cohen Circle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Circle Acquisition has no effect on the direction of Microsoft i.e., Microsoft and Cohen Circle go up and down completely randomly.

Pair Corralation between Microsoft and Cohen Circle

Given the investment horizon of 90 days Microsoft is expected to generate 64.67 times less return on investment than Cohen Circle. But when comparing it to its historical volatility, Microsoft is 12.4 times less risky than Cohen Circle. It trades about 0.07 of its potential returns per unit of risk. Cohen Circle Acquisition is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  27.00  in Cohen Circle Acquisition on September 18, 2024 and sell it today you would earn a total of  17.00  from holding Cohen Circle Acquisition or generate 62.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	17.46%
Values	Daily Returns

Microsoft  vs.  Cohen Circle Acquisition

Microsoft

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 5 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Cohen Circle Acquisition

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Cohen Circle Acquisition are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Cohen Circle showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and Cohen Circle

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

The idea behind Microsoft and Cohen Circle Acquisition 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 Transaction History module to view history of all your transactions and understand their impact on performance.