Correlation Between CONAGRA FOODS and Microsoft
Can any of the company-specific risk be diversified away by investing in both CONAGRA FOODS and Microsoft 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 CONAGRA FOODS and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CONAGRA FOODS and Microsoft, you can compare the effects of market volatilities on CONAGRA FOODS and Microsoft 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 CONAGRA FOODS with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of CONAGRA FOODS and Microsoft.
Diversification Opportunities for CONAGRA FOODS and Microsoft
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CONAGRA and Microsoft is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding CONAGRA FOODS and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and CONAGRA FOODS 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 CONAGRA FOODS are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of CONAGRA FOODS i.e., CONAGRA FOODS and Microsoft go up and down completely randomly.
Pair Corralation between CONAGRA FOODS and Microsoft
Assuming the 90 days trading horizon CONAGRA FOODS is expected to under-perform the Microsoft. But the stock apears to be less risky and, when comparing its historical volatility, CONAGRA FOODS is 1.12 times less risky than Microsoft. The stock trades about -0.03 of its potential returns per unit of risk. The Microsoft is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 22,987 in Microsoft on August 29, 2024 and sell it today you would earn a total of 17,013 from holding Microsoft or generate 74.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CONAGRA FOODS vs. Microsoft
Performance |
| Timeline |
| CONAGRA FOODS |
| Microsoft |
CONAGRA FOODS and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CONAGRA FOODS and Microsoft
The main advantage of trading using opposite CONAGRA FOODS and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CONAGRA FOODS position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| CONAGRA FOODS vs. Apple Inc | CONAGRA FOODS vs. Apple Inc | CONAGRA FOODS vs. Superior Plus Corp | CONAGRA FOODS vs. SIVERS SEMICONDUCTORS AB |
| Microsoft vs. SERI INDUSTRIAL EO | Microsoft vs. AIR PRODCHEMICALS | Microsoft vs. KINGBOARD CHEMICAL | Microsoft vs. Quaker Chemical |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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