Correlation Between Microsoft and Calumet Specialty
Can any of the company-specific risk be diversified away by investing in both Microsoft and Calumet Specialty 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 Calumet Specialty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Calumet Specialty Products, you can compare the effects of market volatilities on Microsoft and Calumet Specialty 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 Calumet Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Calumet Specialty.
Diversification Opportunities for Microsoft and Calumet Specialty
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Calumet is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Calumet Specialty Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calumet Specialty 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 Calumet Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calumet Specialty has no effect on the direction of Microsoft i.e., Microsoft and Calumet Specialty go up and down completely randomly.
Pair Corralation between Microsoft and Calumet Specialty
Given the investment horizon of 90 days Microsoft is expected to generate 1.51 times less return on investment than Calumet Specialty. But when comparing it to its historical volatility, Microsoft is 3.06 times less risky than Calumet Specialty. It trades about 0.19 of its potential returns per unit of risk. Calumet Specialty Products is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,133 in Calumet Specialty Products on September 1, 2024 and sell it today you would earn a total of 121.00 from holding Calumet Specialty Products or generate 5.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Calumet Specialty Products
Performance |
| Timeline |
| Microsoft |
| Calumet Specialty |
Microsoft and Calumet Specialty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Calumet Specialty
The main advantage of trading using opposite Microsoft and Calumet Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Calumet Specialty 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 Calumet Specialty will offset losses from the drop in Calumet Specialty's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Calumet Specialty vs. Battalion Oil Corp | Calumet Specialty vs. Granite Ridge Resources | Calumet Specialty vs. GeoPark | Calumet Specialty vs. Crescent Energy Co |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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