Correlation Between Microsoft and Queen City

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

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

Diversification Opportunities for Microsoft and Queen City

-0.79

Correlation Coefficient

Microsoft  Queen City

Pay attention - limited upside

The 3 months correlation between Microsoft and Queen is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Queen City Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Queen City Investments 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 Queen City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Queen City Investments has no effect on the direction of Microsoft i.e., Microsoft and Queen City go up and down completely randomly.

Pair Corralation between Microsoft and Queen City

Given the investment horizon of 90 days Microsoft is expected to under-perform the Queen City. In addition to that, Microsoft is 1.02 times more volatile than Queen City Investments. It trades about -0.11 of its total potential returns per unit of risk. Queen City Investments is currently generating about 0.06 per unit of volatility. If you would invest  135,000  in Queen City Investments on December 28, 2024 and sell it today you would earn a total of  7,500  from holding Queen City Investments or generate 5.56% return on investment over 90 days.

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

Microsoft  vs.  Queen City Investments

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.

Queen City Investments

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Queen City Investments are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting fundamental indicators, Queen City may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Microsoft and Queen City

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

The idea behind Microsoft and Queen City Investments 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.