Correlation Between Microsoft and Consolidated Communications
Can any of the company-specific risk be diversified away by investing in both Microsoft and Consolidated Communications 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 Consolidated Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Consolidated Communications Holdings, you can compare the effects of market volatilities on Microsoft and Consolidated Communications 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 Consolidated Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Consolidated Communications.
Diversification Opportunities for Microsoft and Consolidated Communications
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microsoft and Consolidated is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Consolidated Communications Ho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Communications 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 Consolidated Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Communications has no effect on the direction of Microsoft i.e., Microsoft and Consolidated Communications go up and down completely randomly.
Pair Corralation between Microsoft and Consolidated Communications
Assuming the 90 days trading horizon Microsoft is expected to generate 1.39 times more return on investment than Consolidated Communications. However, Microsoft is 1.39 times more volatile than Consolidated Communications Holdings. It trades about 0.07 of its potential returns per unit of risk. Consolidated Communications Holdings is currently generating about 0.05 per unit of risk. If you would invest 33,862 in Microsoft on September 12, 2024 and sell it today you would earn a total of 8,403 from holding Microsoft or generate 24.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Consolidated Communications Ho
Performance |
| Timeline |
| Microsoft |
| Consolidated Communications |
Microsoft and Consolidated Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Consolidated Communications
The main advantage of trading using opposite Microsoft and Consolidated Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Consolidated Communications 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 Consolidated Communications will offset losses from the drop in Consolidated Communications' long position.| Microsoft vs. Consolidated Communications Holdings | Microsoft vs. MAROC TELECOM | Microsoft vs. EAT WELL INVESTMENT | Microsoft vs. MGIC 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |