Correlation Between Microsoft Corp and Restaurant Brands
Can any of the company-specific risk be diversified away by investing in both Microsoft Corp and Restaurant Brands 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 Restaurant Brands 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 Restaurant Brands International, you can compare the effects of market volatilities on Microsoft Corp and Restaurant Brands 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 Restaurant Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft Corp and Restaurant Brands.
Diversification Opportunities for Microsoft Corp and Restaurant Brands
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Restaurant is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp CDR and Restaurant Brands Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Restaurant Brands 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 Restaurant Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Restaurant Brands has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and Restaurant Brands go up and down completely randomly.
Pair Corralation between Microsoft Corp and Restaurant Brands
Assuming the 90 days trading horizon Microsoft Corp CDR is expected to generate 1.2 times more return on investment than Restaurant Brands. However, Microsoft Corp is 1.2 times more volatile than Restaurant Brands International. It trades about 0.09 of its potential returns per unit of risk. Restaurant Brands International is currently generating about 0.03 per unit of risk. If you would invest 1,763 in Microsoft Corp CDR on September 12, 2024 and sell it today you would earn a total of 1,473 from holding Microsoft Corp CDR or generate 83.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft Corp CDR vs. Restaurant Brands Internationa
Performance |
| Timeline |
| Microsoft Corp CDR |
| Restaurant Brands |
Microsoft Corp and Restaurant Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft Corp and Restaurant Brands
The main advantage of trading using opposite Microsoft Corp and Restaurant Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft Corp position performs unexpectedly, Restaurant Brands 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 Restaurant Brands will offset losses from the drop in Restaurant Brands' long position.| Microsoft Corp vs. Apple Inc CDR | Microsoft Corp vs. NVIDIA CDR | Microsoft Corp vs. Amazon CDR | Microsoft Corp vs. Alphabet Inc CDR |
| Restaurant Brands vs. Apple Inc CDR | Restaurant Brands vs. NVIDIA CDR | Restaurant Brands vs. Microsoft Corp CDR | Restaurant Brands vs. Amazon CDR |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |