Correlation Between Microsoft and Guardian International

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

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

Diversification Opportunities for Microsoft and Guardian International

-0.85

Correlation Coefficient

Microsoft  Guardian International

Pay attention - limited upside

The 3 months correlation between Microsoft and Guardian is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Guardian International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian International 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 Guardian International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian International has no effect on the direction of Microsoft i.e., Microsoft and Guardian International go up and down completely randomly.

Pair Corralation between Microsoft and Guardian International

Given the investment horizon of 90 days Microsoft is expected to under-perform the Guardian International. In addition to that, Microsoft is 1.89 times more volatile than Guardian International Equity. It trades about -0.11 of its total potential returns per unit of risk. Guardian International Equity is currently generating about 0.23 per unit of volatility. If you would invest  2,190  in Guardian International Equity on December 30, 2024 and sell it today you would earn a total of  283.00  from holding Guardian International Equity or generate 12.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

Microsoft  vs.  Guardian International Equity

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.

Guardian International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian International Equity are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Guardian International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Microsoft and Guardian International

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

The idea behind Microsoft and Guardian International Equity 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.