Correlation Between Microsoft and Cohen Steers

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

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

Diversification Opportunities for Microsoft and Cohen Steers

-0.01

Correlation Coefficient

Microsoft  Cohen Steers

Good diversification

The 3 months correlation between Microsoft and Cohen is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Cohen Steers Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Real 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 Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers Real has no effect on the direction of Microsoft i.e., Microsoft and Cohen Steers go up and down completely randomly.

Pair Corralation between Microsoft and Cohen Steers

Given the investment horizon of 90 days Microsoft is expected to generate 1.48 times more return on investment than Cohen Steers. However, Microsoft is 1.48 times more volatile than Cohen Steers Real. It trades about 0.06 of its potential returns per unit of risk. Cohen Steers Real is currently generating about -0.11 per unit of risk. If you would invest  43,048  in Microsoft on September 14, 2024 and sell it today you would earn a total of  1,908  from holding Microsoft or generate 4.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Microsoft  vs.  Cohen Steers Real

Microsoft

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 4 (%) 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.

Cohen Steers Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cohen Steers Real has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Cohen Steers 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 Cohen Steers

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

The idea behind Microsoft and Cohen Steers Real 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.