Correlation Between Microsoft and Kraft Heinz
Can any of the company-specific risk be diversified away by investing in both Microsoft and Kraft Heinz 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 Kraft Heinz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Kraft Heinz Co, you can compare the effects of market volatilities on Microsoft and Kraft Heinz 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 Kraft Heinz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Kraft Heinz.
Diversification Opportunities for Microsoft and Kraft Heinz
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Kraft is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Kraft Heinz Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Heinz 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 Kraft Heinz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraft Heinz has no effect on the direction of Microsoft i.e., Microsoft and Kraft Heinz go up and down completely randomly.
Pair Corralation between Microsoft and Kraft Heinz
Assuming the 90 days trading horizon Microsoft is expected to generate 1.15 times more return on investment than Kraft Heinz. However, Microsoft is 1.15 times more volatile than Kraft Heinz Co. It trades about 0.08 of its potential returns per unit of risk. Kraft Heinz Co is currently generating about -0.01 per unit of risk. If you would invest 22,949 in Microsoft on August 29, 2024 and sell it today you would earn a total of 17,211 from holding Microsoft or generate 75.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Kraft Heinz Co
Performance |
| Timeline |
| Microsoft |
| Kraft Heinz |
Microsoft and Kraft Heinz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Kraft Heinz
The main advantage of trading using opposite Microsoft and Kraft Heinz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Kraft Heinz 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 Kraft Heinz will offset losses from the drop in Kraft Heinz's long position.| Microsoft vs. Entravision Communications | Microsoft vs. TITANIUM TRANSPORTGROUP | Microsoft vs. Transportadora de Gas | Microsoft vs. RYU Apparel |
| Kraft Heinz vs. Superior Plus Corp | Kraft Heinz vs. SIVERS SEMICONDUCTORS AB | Kraft Heinz vs. Talanx AG | Kraft Heinz vs. 2G ENERGY |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |