Correlation Between Microsoft and Slate Office

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

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

Diversification Opportunities for Microsoft and Slate Office

-0.61

Correlation Coefficient

Microsoft  Slate Office

Excellent diversification

The 3 months correlation between Microsoft and Slate is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Slate Office REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Slate Office REIT 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 Slate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Slate Office REIT has no effect on the direction of Microsoft i.e., Microsoft and Slate Office go up and down completely randomly.

Pair Corralation between Microsoft and Slate Office

Given the investment horizon of 90 days Microsoft is expected to under-perform the Slate Office. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 2.43 times less risky than Slate Office. The stock trades about -0.14 of its potential returns per unit of risk. The Slate Office REIT is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  38.00  in Slate Office REIT on December 5, 2024 and sell it today you would lose (4.00) from holding Slate Office REIT or give up 10.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	92.86%
Values	Daily Returns

Microsoft  vs.  Slate Office REIT

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 abnormal performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Slate Office REIT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Slate Office REIT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Slate Office reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and Slate Office

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

The idea behind Microsoft and Slate Office REIT 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.