Correlation Between Microsoft and NorthView Acquisition

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

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

Diversification Opportunities for Microsoft and NorthView Acquisition

-0.34

Correlation Coefficient

Microsoft  NorthView Acquisition

Very good diversification

The 3 months correlation between Microsoft and NorthView is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and NorthView Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorthView Acquisition 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 NorthView Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorthView Acquisition has no effect on the direction of Microsoft i.e., Microsoft and NorthView Acquisition go up and down completely randomly.

Pair Corralation between Microsoft and NorthView Acquisition

Given the investment horizon of 90 days Microsoft is expected to generate 0.06 times more return on investment than NorthView Acquisition. However, Microsoft is 16.44 times less risky than NorthView Acquisition. It trades about 0.01 of its potential returns per unit of risk. NorthView Acquisition is currently generating about -0.02 per unit of risk. If you would invest  42,944  in Microsoft on September 29, 2024 and sell it today you would earn a total of  109.00  from holding Microsoft or generate 0.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

Microsoft  vs.  NorthView Acquisition

Microsoft

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

NorthView Acquisition

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days NorthView Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Microsoft and NorthView Acquisition

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

The idea behind Microsoft and NorthView Acquisition 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.