Correlation Between Microsoft and OFFICE DEPOT
Can any of the company-specific risk be diversified away by investing in both Microsoft and OFFICE DEPOT 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 OFFICE DEPOT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and OFFICE DEPOT, you can compare the effects of market volatilities on Microsoft and OFFICE DEPOT 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 OFFICE DEPOT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and OFFICE DEPOT.
Diversification Opportunities for Microsoft and OFFICE DEPOT
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microsoft and OFFICE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and OFFICE DEPOT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFFICE DEPOT 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 OFFICE DEPOT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFFICE DEPOT has no effect on the direction of Microsoft i.e., Microsoft and OFFICE DEPOT go up and down completely randomly.
Pair Corralation between Microsoft and OFFICE DEPOT
If you would invest 40,775 in Microsoft on September 27, 2024 and sell it today you would earn a total of 1,190 from holding Microsoft or generate 2.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. OFFICE DEPOT
Performance |
| Timeline |
| Microsoft |
| OFFICE DEPOT |
Microsoft and OFFICE DEPOT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and OFFICE DEPOT
The main advantage of trading using opposite Microsoft and OFFICE DEPOT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, OFFICE DEPOT 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 OFFICE DEPOT will offset losses from the drop in OFFICE DEPOT's long position.The idea behind Microsoft and OFFICE DEPOT 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.| OFFICE DEPOT vs. Apple Inc | OFFICE DEPOT vs. Apple Inc | OFFICE DEPOT vs. Microsoft | OFFICE DEPOT vs. Microsoft |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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