Correlation Between Microsoft and Manning Napier

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

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

Diversification Opportunities for Microsoft and Manning Napier

0.65

Correlation Coefficient

Microsoft  Manning Napier

Poor diversification

The 3 months correlation between Microsoft and Manning is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Manning Napier Callodine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manning Napier Callodine 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 Manning Napier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manning Napier Callodine has no effect on the direction of Microsoft i.e., Microsoft and Manning Napier go up and down completely randomly.

Pair Corralation between Microsoft and Manning Napier

Given the investment horizon of 90 days Microsoft is expected to under-perform the Manning Napier. In addition to that, Microsoft is 1.82 times more volatile than Manning Napier Callodine. It trades about -0.11 of its total potential returns per unit of risk. Manning Napier Callodine is currently generating about -0.02 per unit of volatility. If you would invest  1,323  in Manning Napier Callodine on December 29, 2024 and sell it today you would lose (20.00) from holding Manning Napier Callodine or give up 1.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Microsoft  vs.  Manning Napier Callodine

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.

Manning Napier Callodine

Risk-Adjusted Performance

Very Weak

Over the last 90 days Manning Napier Callodine has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Manning Napier is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Microsoft and Manning Napier

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

The idea behind Microsoft and Manning Napier Callodine 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..