Correlation Between Microsoft and Satellogic Warrant

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

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

Diversification Opportunities for Microsoft and Satellogic Warrant

-0.4

Correlation Coefficient

Microsoft  Satellogic Warrant

Very good diversification

The 3 months correlation between Microsoft and Satellogic is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Satellogic Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satellogic Warrant 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 Satellogic Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satellogic Warrant has no effect on the direction of Microsoft i.e., Microsoft and Satellogic Warrant go up and down completely randomly.

Pair Corralation between Microsoft and Satellogic Warrant

Given the investment horizon of 90 days Microsoft is expected to under-perform the Satellogic Warrant. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 7.98 times less risky than Satellogic Warrant. The stock trades about -0.11 of its potential returns per unit of risk. The Satellogic Warrant is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  45.00  in Satellogic Warrant on December 30, 2024 and sell it today you would earn a total of  5.00  from holding Satellogic Warrant or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Microsoft  vs.  Satellogic Warrant

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.

Satellogic Warrant

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Satellogic Warrant are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, Satellogic Warrant showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and Satellogic Warrant

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

The idea behind Microsoft and Satellogic Warrant 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.