Correlation Between Microsoft and Kirr Marbach

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

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

Diversification Opportunities for Microsoft and Kirr Marbach

0.62

Correlation Coefficient

Microsoft  Kirr Marbach

Poor diversification

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

Pair Corralation between Microsoft and Kirr Marbach

Given the investment horizon of 90 days Microsoft is expected to under-perform the Kirr Marbach. In addition to that, Microsoft is 1.04 times more volatile than Kirr Marbach Partners. It trades about -0.1 of its total potential returns per unit of risk. Kirr Marbach Partners is currently generating about -0.04 per unit of volatility. If you would invest  3,243  in Kirr Marbach Partners on December 21, 2024 and sell it today you would lose (124.00) from holding Kirr Marbach Partners or give up 3.82% of portfolio value over 90 days.

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

Microsoft  vs.  Kirr Marbach Partners

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.

Kirr Marbach Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kirr Marbach Partners has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Kirr Marbach 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 Kirr Marbach

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

The idea behind Microsoft and Kirr Marbach Partners 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.