Correlation Between Microsoft and Nuvve Holding

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

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

Diversification Opportunities for Microsoft and Nuvve Holding

0.12

Correlation Coefficient

Microsoft  Nuvve Holding

Average diversification

The 3 months correlation between Microsoft and Nuvve is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Nuvve Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvve Holding 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 Nuvve Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvve Holding Corp has no effect on the direction of Microsoft i.e., Microsoft and Nuvve Holding go up and down completely randomly.

Pair Corralation between Microsoft and Nuvve Holding

Given the investment horizon of 90 days Microsoft is expected to generate 40.28 times less return on investment than Nuvve Holding. But when comparing it to its historical volatility, Microsoft is 20.87 times less risky than Nuvve Holding. It trades about 0.05 of its potential returns per unit of risk. Nuvve Holding Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1.60  in Nuvve Holding Corp on September 3, 2024 and sell it today you would earn a total of  0.51  from holding Nuvve Holding Corp or generate 31.87% return on investment over 90 days.

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

Microsoft  vs.  Nuvve Holding Corp

Microsoft

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 3 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Nuvve Holding Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuvve Holding Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Nuvve Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and Nuvve Holding

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

The idea behind Microsoft and Nuvve Holding 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.