Correlation Between Microsoft and Graf Global

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

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

Diversification Opportunities for Microsoft and Graf Global

-0.39

Correlation Coefficient

Microsoft  Graf Global

Very good diversification

The 3 months correlation between Microsoft and Graf is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Graf Global Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graf Global Corp 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 Graf Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graf Global Corp has no effect on the direction of Microsoft i.e., Microsoft and Graf Global go up and down completely randomly.

Pair Corralation between Microsoft and Graf Global

Given the investment horizon of 90 days Microsoft is expected to under-perform the Graf Global. In addition to that, Microsoft is 11.78 times more volatile than Graf Global Corp. It trades about -0.08 of its total potential returns per unit of risk. Graf Global Corp is currently generating about 0.22 per unit of volatility. If you would invest  1,007  in Graf Global Corp on December 28, 2024 and sell it today you would earn a total of  18.00  from holding Graf Global Corp or generate 1.79% return on investment over 90 days.

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

Microsoft  vs.  Graf Global Corp

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.

Graf Global Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Graf Global Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Graf Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Microsoft and Graf Global

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

The idea behind Microsoft and Graf Global Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.