Correlation Between Microsoft and CureVac NV

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

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

Diversification Opportunities for Microsoft and CureVac NV

0.61

Correlation Coefficient

Microsoft  CureVac NV

Poor diversification

The 3 months correlation between Microsoft and CureVac is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and CureVac NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CureVac NV 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 CureVac NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CureVac NV has no effect on the direction of Microsoft i.e., Microsoft and CureVac NV go up and down completely randomly.

Pair Corralation between Microsoft and CureVac NV

Given the investment horizon of 90 days Microsoft is expected to under-perform the CureVac NV. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 2.98 times less risky than CureVac NV. The stock trades about -0.11 of its potential returns per unit of risk. The CureVac NV is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  312.00  in CureVac NV on December 30, 2024 and sell it today you would lose (14.00) from holding CureVac NV or give up 4.49% of portfolio value over 90 days.

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

Microsoft  vs.  CureVac NV

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.

CureVac NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days CureVac NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CureVac NV is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Microsoft and CureVac NV

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

The idea behind Microsoft and CureVac NV 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.