Correlation Between Microsoft and BlackBerry
Can any of the company-specific risk be diversified away by investing in both Microsoft and BlackBerry 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 BlackBerry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and BlackBerry, you can compare the effects of market volatilities on Microsoft and BlackBerry 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 BlackBerry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and BlackBerry.
Diversification Opportunities for Microsoft and BlackBerry
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microsoft and BlackBerry is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and BlackBerry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackBerry 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 BlackBerry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackBerry has no effect on the direction of Microsoft i.e., Microsoft and BlackBerry go up and down completely randomly.
Pair Corralation between Microsoft and BlackBerry
Given the investment horizon of 90 days Microsoft is expected to generate 10.58 times less return on investment than BlackBerry. But when comparing it to its historical volatility, Microsoft is 5.83 times less risky than BlackBerry. It trades about 0.18 of its potential returns per unit of risk. BlackBerry is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 235.00 in BlackBerry on September 23, 2024 and sell it today you would earn a total of 134.00 from holding BlackBerry or generate 57.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. BlackBerry
Performance |
| Timeline |
| Microsoft |
| BlackBerry |
Microsoft and BlackBerry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and BlackBerry
The main advantage of trading using opposite Microsoft and BlackBerry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, BlackBerry 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 BlackBerry will offset losses from the drop in BlackBerry's long position.| Microsoft vs. BlackBerry | Microsoft vs. Global Blue Group | Microsoft vs. Aurora Mobile | Microsoft vs. Marqeta |
| BlackBerry vs. Affirm Holdings | BlackBerry vs. Block Inc | BlackBerry vs. Uipath Inc | BlackBerry vs. Toast Inc |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |