Correlation Between Microsoft and Corporativo Fragua

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

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

Diversification Opportunities for Microsoft and Corporativo Fragua

0.62

Correlation Coefficient

Microsoft  Corporativo Fragua

Poor diversification

The 3 months correlation between Microsoft and Corporativo is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Corporativo Fragua SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporativo Fragua SAB 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 Corporativo Fragua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporativo Fragua SAB has no effect on the direction of Microsoft i.e., Microsoft and Corporativo Fragua go up and down completely randomly.

Pair Corralation between Microsoft and Corporativo Fragua

Given the investment horizon of 90 days Microsoft is expected to under-perform the Corporativo Fragua. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.87 times less risky than Corporativo Fragua. The stock trades about -0.11 of its potential returns per unit of risk. The Corporativo Fragua SAB is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  61,000  in Corporativo Fragua SAB on December 26, 2024 and sell it today you would lose (7,450) from holding Corporativo Fragua SAB or give up 12.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Microsoft  vs.  Corporativo Fragua SAB

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.

Corporativo Fragua SAB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Corporativo Fragua SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Microsoft and Corporativo Fragua

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

The idea behind Microsoft and Corporativo Fragua SAB 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.