Correlation Between Microsoft and Mint
Can any of the company-specific risk be diversified away by investing in both Microsoft and Mint 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 Mint into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and The Mint, you can compare the effects of market volatilities on Microsoft and Mint 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 Mint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Mint.
Diversification Opportunities for Microsoft and Mint
Significant diversification
The 3 months correlation between Microsoft and Mint is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and The Mint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mint 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 Mint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mint has no effect on the direction of Microsoft i.e., Microsoft and Mint go up and down completely randomly.
Pair Corralation between Microsoft and Mint
Given the investment horizon of 90 days Microsoft is expected to generate 457.6 times less return on investment than Mint. But when comparing it to its historical volatility, Microsoft is 218.17 times less risky than Mint. It trades about 0.15 of its potential returns per unit of risk. The Mint is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1.85 in The Mint on September 13, 2024 and sell it today you would lose (0.65) from holding The Mint or give up 35.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.73% |
| Values | Daily Returns |
Microsoft vs. The Mint
Performance |
| Timeline |
| Microsoft |
| Mint |
Microsoft and Mint Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Mint
The main advantage of trading using opposite Microsoft and Mint positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Mint 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 Mint will offset losses from the drop in Mint's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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