Correlation Between Microsoft and Curo Holdings

Can any of the company-specific risk be diversified away by investing in both Microsoft and Curo Holdings 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 Curo Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Microsoft and Curo Holdings Co, you can compare the effects of market volatilities on Microsoft and Curo Holdings 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 Curo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Curo Holdings.

Diversification Opportunities for Microsoft and Curo Holdings

-0.48

Correlation Coefficient

Microsoft  Curo Holdings

Very good diversification

The 3 months correlation between Microsoft and Curo is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Curo Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curo Holdings 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 Curo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Curo Holdings has no effect on the direction of Microsoft i.e., Microsoft and Curo Holdings go up and down completely randomly.

Pair Corralation between Microsoft and Curo Holdings

Given the investment horizon of 90 days Microsoft is expected to generate 0.83 times more return on investment than Curo Holdings. However, Microsoft is 1.2 times less risky than Curo Holdings. It trades about 0.16 of its potential returns per unit of risk. Curo Holdings Co is currently generating about -0.86 per unit of risk. If you would invest  42,299  in Microsoft on September 28, 2024 and sell it today you would earn a total of  1,512  from holding Microsoft or generate 3.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	30.0%
Values	Daily Returns

Microsoft  vs.  Curo Holdings Co

Microsoft

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Curo Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Curo Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Microsoft and Curo Holdings

The main advantage of trading using opposite Microsoft and Curo Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Curo Holdings 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 Curo Holdings will offset losses from the drop in Curo Holdings' long position.

The idea behind Microsoft and Curo Holdings Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.