Correlation Between Microsoft and Strategic Advisers

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

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

Diversification Opportunities for Microsoft and Strategic Advisers

-0.25

Correlation Coefficient

Microsoft  Strategic Advisers

Very good diversification

The 3 months correlation between Microsoft and Strategic is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Strategic Advisers Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Advisers 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 Strategic Advisers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Advisers has no effect on the direction of Microsoft i.e., Microsoft and Strategic Advisers go up and down completely randomly.

Pair Corralation between Microsoft and Strategic Advisers

Given the investment horizon of 90 days Microsoft is expected to under-perform the Strategic Advisers. In addition to that, Microsoft is 1.75 times more volatile than Strategic Advisers Emerging. It trades about -0.14 of its total potential returns per unit of risk. Strategic Advisers Emerging is currently generating about -0.03 per unit of volatility. If you would invest  1,132  in Strategic Advisers Emerging on December 5, 2024 and sell it today you would lose (21.00) from holding Strategic Advisers Emerging or give up 1.86% of portfolio value over 90 days.

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

Microsoft  vs.  Strategic Advisers Emerging

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 abnormal performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Strategic Advisers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Strategic Advisers Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Strategic Advisers 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 Strategic Advisers

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

The idea behind Microsoft and Strategic Advisers Emerging 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.