Correlation Between Microsoft and United Robotics

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

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

Diversification Opportunities for Microsoft and United Robotics

0.25

Correlation Coefficient

Microsoft  United Robotics

Modest diversification

The 3 months correlation between Microsoft and United is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and United Robotics Artificial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Robotics Arti 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 United Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Robotics Arti has no effect on the direction of Microsoft i.e., Microsoft and United Robotics go up and down completely randomly.

Pair Corralation between Microsoft and United Robotics

Given the investment horizon of 90 days Microsoft is expected to generate 0.78 times more return on investment than United Robotics. However, Microsoft is 1.28 times less risky than United Robotics. It trades about -0.22 of its potential returns per unit of risk. United Robotics Artificial is currently generating about -0.19 per unit of risk. If you would invest  44,602  in Microsoft on October 8, 2024 and sell it today you would lose (2,267) from holding Microsoft or give up 5.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.0%
Values	Daily Returns

Microsoft  vs.  United Robotics Artificial

Microsoft

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 2 (%) 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.

United Robotics Arti

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Robotics Artificial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, United Robotics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and United Robotics

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

The idea behind Microsoft and United Robotics Artificial 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 CEOs Directory module to screen CEOs from public companies around the world.