Correlation Between Microsoft Corp and Interfor Corp
Can any of the company-specific risk be diversified away by investing in both Microsoft Corp and Interfor Corp 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 Corp and Interfor Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft Corp CDR and Interfor Corp, you can compare the effects of market volatilities on Microsoft Corp and Interfor Corp 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 Corp with a short position of Interfor Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft Corp and Interfor Corp.
Diversification Opportunities for Microsoft Corp and Interfor Corp
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Interfor is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp CDR and Interfor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interfor Corp and Microsoft Corp 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 Corp CDR are associated (or correlated) with Interfor Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interfor Corp has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and Interfor Corp go up and down completely randomly.
Pair Corralation between Microsoft Corp and Interfor Corp
Assuming the 90 days trading horizon Microsoft Corp CDR is expected to generate 0.34 times more return on investment than Interfor Corp. However, Microsoft Corp CDR is 2.96 times less risky than Interfor Corp. It trades about -0.11 of its potential returns per unit of risk. Interfor Corp is currently generating about -0.05 per unit of risk. If you would invest 3,001 in Microsoft Corp CDR on December 6, 2024 and sell it today you would lose (85.00) from holding Microsoft Corp CDR or give up 2.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft Corp CDR vs. Interfor Corp
Performance |
| Timeline |
| Microsoft Corp CDR |
| Interfor Corp |
Microsoft Corp and Interfor Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft Corp and Interfor Corp
The main advantage of trading using opposite Microsoft Corp and Interfor Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft Corp position performs unexpectedly, Interfor Corp 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 Interfor Corp will offset losses from the drop in Interfor Corp's long position.| Microsoft Corp vs. Verizon Communications CDR | Microsoft Corp vs. Cogeco Communications | Microsoft Corp vs. Goldbank Mining Corp | Microsoft Corp vs. Pollard Banknote Limited |
| Interfor Corp vs. Canfor | Interfor Corp vs. West Fraser Timber | Interfor Corp vs. Western Forest Products | Interfor Corp vs. Stella Jones |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |