Correlation Between Microsoft and CRAWFORD A

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

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

Diversification Opportunities for Microsoft and CRAWFORD A

0.22

Correlation Coefficient

Microsoft  CRAWFORD A

Modest diversification

The 3 months correlation between Microsoft and CRAWFORD is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and CRAWFORD A NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRAWFORD A 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 CRAWFORD A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRAWFORD A NV has no effect on the direction of Microsoft i.e., Microsoft and CRAWFORD A go up and down completely randomly.

Pair Corralation between Microsoft and CRAWFORD A

Given the investment horizon of 90 days Microsoft is expected to generate 0.62 times more return on investment than CRAWFORD A. However, Microsoft is 1.62 times less risky than CRAWFORD A. It trades about 0.04 of its potential returns per unit of risk. CRAWFORD A NV is currently generating about -0.08 per unit of risk. If you would invest  42,299  in Microsoft on September 28, 2024 and sell it today you would earn a total of  422.00  from holding Microsoft or generate 1.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Microsoft  vs.  CRAWFORD A NV

Microsoft

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 2 (%) 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.

CRAWFORD A NV

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CRAWFORD A NV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, CRAWFORD A reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and CRAWFORD A

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

The idea behind Microsoft and CRAWFORD A 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.