Correlation Between Microsoft and Ratch Group
Can any of the company-specific risk be diversified away by investing in both Microsoft and Ratch Group 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 Ratch Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Ratch Group Public, you can compare the effects of market volatilities on Microsoft and Ratch Group 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 Ratch Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Ratch Group.
Diversification Opportunities for Microsoft and Ratch Group
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Ratch is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Ratch Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ratch Group Public 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 Ratch Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ratch Group Public has no effect on the direction of Microsoft i.e., Microsoft and Ratch Group go up and down completely randomly.
Pair Corralation between Microsoft and Ratch Group
Given the investment horizon of 90 days Microsoft is expected to under-perform the Ratch Group. In addition to that, Microsoft is 1.32 times more volatile than Ratch Group Public. It trades about -0.15 of its total potential returns per unit of risk. Ratch Group Public is currently generating about 0.17 per unit of volatility. If you would invest 2,700 in Ratch Group Public on November 1, 2025 and sell it today you would earn a total of 375.00 from holding Ratch Group Public or generate 13.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.36% |
| Values | Daily Returns |
Microsoft vs. Ratch Group Public
Performance |
| Timeline |
| Microsoft |
| Ratch Group Public |
Microsoft and Ratch Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Ratch Group
The main advantage of trading using opposite Microsoft and Ratch Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Ratch Group 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 Ratch Group will offset losses from the drop in Ratch Group's long position.| Microsoft vs. Bank of America | Microsoft vs. Coca Cola Consolidated | Microsoft vs. Merck Company | Microsoft vs. Elbit Systems |
| Ratch Group vs. Electricity Generating Public | Ratch Group vs. TTW Public | Ratch Group vs. Sahacogen Public | Ratch Group vs. Global Power Synergy |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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