Correlation Between Microsoft and HF Sinclair
Can any of the company-specific risk be diversified away by investing in both Microsoft and HF Sinclair 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 HF Sinclair into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and HF Sinclair Corp, you can compare the effects of market volatilities on Microsoft and HF Sinclair 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 HF Sinclair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and HF Sinclair.
Diversification Opportunities for Microsoft and HF Sinclair
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and DINO is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and HF Sinclair Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF Sinclair Corp 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 HF Sinclair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF Sinclair Corp has no effect on the direction of Microsoft i.e., Microsoft and HF Sinclair go up and down completely randomly.
Pair Corralation between Microsoft and HF Sinclair
Given the investment horizon of 90 days Microsoft is expected to generate 0.69 times more return on investment than HF Sinclair. However, Microsoft is 1.44 times less risky than HF Sinclair. It trades about 0.09 of its potential returns per unit of risk. HF Sinclair Corp is currently generating about 0.0 per unit of risk. If you would invest 24,146 in Microsoft on August 30, 2024 and sell it today you would earn a total of 18,153 from holding Microsoft or generate 75.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. HF Sinclair Corp
Performance |
| Timeline |
| Microsoft |
| HF Sinclair Corp |
Microsoft and HF Sinclair Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and HF Sinclair
The main advantage of trading using opposite Microsoft and HF Sinclair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, HF Sinclair 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 HF Sinclair will offset losses from the drop in HF Sinclair's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| HF Sinclair vs. Delek Energy | HF Sinclair vs. Crossamerica Partners LP | HF Sinclair vs. Par Pacific Holdings | HF Sinclair vs. Valvoline |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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