Correlation Between Microsoft and L3Harris Technologies,

Can any of the company-specific risk be diversified away by investing in both Microsoft and L3Harris Technologies, 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 L3Harris Technologies, into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Microsoft and L3Harris Technologies,, you can compare the effects of market volatilities on Microsoft and L3Harris Technologies, 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 L3Harris Technologies,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and L3Harris Technologies,.

Diversification Opportunities for Microsoft and L3Harris Technologies,

0.79

Correlation Coefficient

Microsoft  L3Harris Technologies,

Poor diversification

The 3 months correlation between Microsoft and L3Harris is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and L3Harris Technologies, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L3Harris Technologies, 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 L3Harris Technologies,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L3Harris Technologies, has no effect on the direction of Microsoft i.e., Microsoft and L3Harris Technologies, go up and down completely randomly.

Pair Corralation between Microsoft and L3Harris Technologies,

Assuming the 90 days trading horizon Microsoft is expected to under-perform the L3Harris Technologies,. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.31 times less risky than L3Harris Technologies,. The stock trades about -0.2 of its potential returns per unit of risk. The L3Harris Technologies, is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  32,765  in L3Harris Technologies, on December 27, 2024 and sell it today you would lose (2,763) from holding L3Harris Technologies, or give up 8.43% of portfolio value over 90 days.

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

Microsoft  vs.  L3Harris Technologies,

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. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

L3Harris Technologies,

Risk-Adjusted Performance

Very Weak

Over the last 90 days L3Harris Technologies, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Microsoft and L3Harris Technologies,

The main advantage of trading using opposite Microsoft and L3Harris Technologies, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, L3Harris Technologies, 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 L3Harris Technologies, will offset losses from the drop in L3Harris Technologies,'s long position.

The idea behind Microsoft and L3Harris Technologies, 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.