Correlation Between Microsoft and Mondelez International
Can any of the company-specific risk be diversified away by investing in both Microsoft and Mondelez International 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 Mondelez International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Mondelez International, you can compare the effects of market volatilities on Microsoft and Mondelez International 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 Mondelez International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Mondelez International.
Diversification Opportunities for Microsoft and Mondelez International
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Mondelez is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Mondelez International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondelez International 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 Mondelez International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondelez International has no effect on the direction of Microsoft i.e., Microsoft and Mondelez International go up and down completely randomly.
Pair Corralation between Microsoft and Mondelez International
Given the investment horizon of 90 days Microsoft is expected to generate 1.47 times more return on investment than Mondelez International. However, Microsoft is 1.47 times more volatile than Mondelez International. It trades about -0.04 of its potential returns per unit of risk. Mondelez International is currently generating about -0.27 per unit of risk. If you would invest 42,574 in Microsoft on August 27, 2024 and sell it today you would lose (695.00) from holding Microsoft or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Mondelez International
Performance |
| Timeline |
| Microsoft |
| Mondelez International |
Microsoft and Mondelez International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Mondelez International
The main advantage of trading using opposite Microsoft and Mondelez International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Mondelez International 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 Mondelez International will offset losses from the drop in Mondelez International's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |