Correlation Between Microsoft and Churchill Capital

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

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

Diversification Opportunities for Microsoft and Churchill Capital

0.0

Correlation Coefficient

Microsoft  Churchill Capital

Pay attention - limited upside

The 3 months correlation between Microsoft and Churchill is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Churchill Capital VI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Churchill Capital 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 Churchill Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Churchill Capital has no effect on the direction of Microsoft i.e., Microsoft and Churchill Capital go up and down completely randomly.

Pair Corralation between Microsoft and Churchill Capital

If you would invest (100.00) in Churchill Capital VI on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Churchill Capital VI or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Microsoft  vs.  Churchill Capital VI

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.

Churchill Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Churchill Capital VI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Churchill Capital is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Microsoft and Churchill Capital

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

The idea behind Microsoft and Churchill Capital VI 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.