Correlation Between Microsoft and Global Blue

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

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

Diversification Opportunities for Microsoft and Global Blue

0.43

Correlation Coefficient

Microsoft  Global Blue

Very weak diversification

The 3 months correlation between Microsoft and Global is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Global Blue Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Blue Group 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 Global Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Blue Group has no effect on the direction of Microsoft i.e., Microsoft and Global Blue go up and down completely randomly.

Pair Corralation between Microsoft and Global Blue

Given the investment horizon of 90 days Microsoft is expected to generate 1.68 times less return on investment than Global Blue. But when comparing it to its historical volatility, Microsoft is 2.54 times less risky than Global Blue. It trades about 0.05 of its potential returns per unit of risk. Global Blue Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  578.00  in Global Blue Group on September 16, 2024 and sell it today you would earn a total of  24.00  from holding Global Blue Group or generate 4.15% return on investment over 90 days.

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

Microsoft  vs.  Global Blue Group

Microsoft

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 4 (%) 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.

Global Blue Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Blue Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Global Blue may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Microsoft and Global Blue

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

The idea behind Microsoft and Global Blue Group 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.