Correlation Between Microsoft and Oklahoma College

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

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

Diversification Opportunities for Microsoft and Oklahoma College

0.47

Correlation Coefficient

Microsoft  Oklahoma College

Very weak diversification

The 3 months correlation between Microsoft and Oklahoma is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Oklahoma College Savings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oklahoma College Savings 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 Oklahoma College. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oklahoma College Savings has no effect on the direction of Microsoft i.e., Microsoft and Oklahoma College go up and down completely randomly.

Pair Corralation between Microsoft and Oklahoma College

Given the investment horizon of 90 days Microsoft is expected to generate 1.76 times less return on investment than Oklahoma College. In addition to that, Microsoft is 1.13 times more volatile than Oklahoma College Savings. It trades about 0.06 of its total potential returns per unit of risk. Oklahoma College Savings is currently generating about 0.13 per unit of volatility. If you would invest  1,526  in Oklahoma College Savings on September 20, 2024 and sell it today you would earn a total of  134.00  from holding Oklahoma College Savings or generate 8.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Microsoft  vs.  Oklahoma College Savings

Microsoft

Risk-Adjusted Performance

5 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 5 (%) 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.

Oklahoma College Savings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oklahoma College Savings are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Oklahoma College may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Microsoft and Oklahoma College

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

The idea behind Microsoft and Oklahoma College Savings 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.