Correlation Between Microsoft and C WorldWide

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

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

Diversification Opportunities for Microsoft and C WorldWide

-0.12

Correlation Coefficient

Microsoft  C WorldWide

Good diversification

The 3 months correlation between Microsoft and CWIGAKLA is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and C WorldWide Globale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C WorldWide Globale 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 C WorldWide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C WorldWide Globale has no effect on the direction of Microsoft i.e., Microsoft and C WorldWide go up and down completely randomly.

Pair Corralation between Microsoft and C WorldWide

Given the investment horizon of 90 days Microsoft is expected to under-perform the C WorldWide. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.03 times less risky than C WorldWide. The stock trades about -0.12 of its potential returns per unit of risk. The C WorldWide Globale is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  95,490  in C WorldWide Globale on December 4, 2024 and sell it today you would lose (7,670) from holding C WorldWide Globale or give up 8.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.27%
Values	Daily Returns

Microsoft  vs.  C WorldWide Globale

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.

C WorldWide Globale

Risk-Adjusted Performance

Very Weak

Over the last 90 days C WorldWide Globale has generated negative risk-adjusted returns adding no value to fund investors. Despite latest unsteady performance, the Fund's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the fund institutional investors.

Pair Trading with Microsoft and C WorldWide

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

The idea behind Microsoft and C WorldWide Globale 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.