Correlation Between Microsoft and Reitmans (Canada)
Can any of the company-specific risk be diversified away by investing in both Microsoft and Reitmans (Canada) 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 Reitmans (Canada) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Reitmans Limited, you can compare the effects of market volatilities on Microsoft and Reitmans (Canada) 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 Reitmans (Canada). Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Reitmans (Canada).
Diversification Opportunities for Microsoft and Reitmans (Canada)
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Reitmans is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Reitmans Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reitmans (Canada) 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 Reitmans (Canada). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reitmans (Canada) has no effect on the direction of Microsoft i.e., Microsoft and Reitmans (Canada) go up and down completely randomly.
Pair Corralation between Microsoft and Reitmans (Canada)
Given the investment horizon of 90 days Microsoft is expected to generate 0.74 times more return on investment than Reitmans (Canada). However, Microsoft is 1.36 times less risky than Reitmans (Canada). It trades about 0.0 of its potential returns per unit of risk. Reitmans Limited is currently generating about -0.01 per unit of risk. If you would invest 40,146 in Microsoft on December 4, 2024 and sell it today you would lose (1,297) from holding Microsoft or give up 3.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
Microsoft vs. Reitmans Limited
Performance |
| Timeline |
| Microsoft |
| Reitmans (Canada) |
Microsoft and Reitmans (Canada) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Reitmans (Canada)
The main advantage of trading using opposite Microsoft and Reitmans (Canada) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Reitmans (Canada) 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 Reitmans (Canada) will offset losses from the drop in Reitmans (Canada)'s long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Reitmans (Canada) vs. Reitmans Canada | Reitmans (Canada) vs. Lite Access Technologies | Reitmans (Canada) vs. Legend Power Systems | Reitmans (Canada) vs. Supremex |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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