Correlation Between MicroStrategy Incorporated and Upstart Holdings

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

By analyzing existing cross correlation between MicroStrategy Incorporated and Upstart Holdings, you can compare the effects of market volatilities on MicroStrategy Incorporated and Upstart Holdings 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 MicroStrategy Incorporated with a short position of Upstart Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroStrategy Incorporated and Upstart Holdings.

Diversification Opportunities for MicroStrategy Incorporated and Upstart Holdings

0.47

Correlation Coefficient

MicroStrategy Incorporated  Upstart Holdings

Very weak diversification

The 3 months correlation between MicroStrategy and Upstart is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding MicroStrategy Incorporated and Upstart Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upstart Holdings and MicroStrategy Incorporated 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 MicroStrategy Incorporated are associated (or correlated) with Upstart Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upstart Holdings has no effect on the direction of MicroStrategy Incorporated i.e., MicroStrategy Incorporated and Upstart Holdings go up and down completely randomly.

Pair Corralation between MicroStrategy Incorporated and Upstart Holdings

Given the investment horizon of 90 days MicroStrategy Incorporated is expected to generate 0.99 times more return on investment than Upstart Holdings. However, MicroStrategy Incorporated is 1.01 times less risky than Upstart Holdings. It trades about 0.0 of its potential returns per unit of risk. Upstart Holdings is currently generating about -0.05 per unit of risk. If you would invest  33,223  in MicroStrategy Incorporated on December 23, 2024 and sell it today you would lose (2,823) from holding MicroStrategy Incorporated or give up 8.5% of portfolio value over 90 days.

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

MicroStrategy Incorporated  vs.  Upstart Holdings

MicroStrategy Incorporated

Risk-Adjusted Performance

Very Weak

Over the last 90 days MicroStrategy Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, MicroStrategy Incorporated is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Upstart Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Upstart Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic 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.

Pair Trading with MicroStrategy Incorporated and Upstart Holdings

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

The idea behind MicroStrategy Incorporated and Upstart Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.