Correlation Between Microsoft and Upright Growth

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

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

Diversification Opportunities for Microsoft and Upright Growth

0.26

Correlation Coefficient

Microsoft  Upright Growth

Modest diversification

The 3 months correlation between Microsoft and Upright is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Upright Growth Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upright Growth Income 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 Upright Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upright Growth Income has no effect on the direction of Microsoft i.e., Microsoft and Upright Growth go up and down completely randomly.

Pair Corralation between Microsoft and Upright Growth

Given the investment horizon of 90 days Microsoft is expected to generate 3.93 times less return on investment than Upright Growth. But when comparing it to its historical volatility, Microsoft is 1.17 times less risky than Upright Growth. It trades about 0.05 of its potential returns per unit of risk. Upright Growth Income is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,702  in Upright Growth Income on September 15, 2024 and sell it today you would earn a total of  302.00  from holding Upright Growth Income or generate 17.74% return on investment over 90 days.

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

Microsoft  vs.  Upright Growth Income

Microsoft

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 4 (%) 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.

Upright Growth Income

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Upright Growth Income are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Upright Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and Upright Growth

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

The idea behind Microsoft and Upright Growth Income 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.