Correlation Between Microsoft and Citizensselect Funds

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

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

Diversification Opportunities for Microsoft and Citizensselect Funds

0.29

Correlation Coefficient

Microsoft  Citizensselect Funds

Modest diversification

The 3 months correlation between Microsoft and Citizensselect is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Citizensselect Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizensselect Funds 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 Citizensselect Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizensselect Funds has no effect on the direction of Microsoft i.e., Microsoft and Citizensselect Funds go up and down completely randomly.

Pair Corralation between Microsoft and Citizensselect Funds

If you would invest  42,799  in Microsoft on September 27, 2024 and sell it today you would earn a total of  1,134  from holding Microsoft or generate 2.65% return on investment over 90 days.

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

Microsoft  vs.  Citizensselect Funds

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Citizensselect Funds

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citizensselect Funds are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Citizensselect Funds 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 Citizensselect Funds

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

The idea behind Microsoft and Citizensselect Funds 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.