Correlation Between Microsoft and CC Neuberger

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

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

Diversification Opportunities for Microsoft and CC Neuberger

0.04

Correlation Coefficient

Microsoft  CC Neuberger

Significant diversification

The 3 months correlation between Microsoft and PRPC is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and CC Neuberger Principal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CC Neuberger Principal 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 CC Neuberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CC Neuberger Principal has no effect on the direction of Microsoft i.e., Microsoft and CC Neuberger go up and down completely randomly.

Pair Corralation between Microsoft and CC Neuberger

If you would invest  42,435  in Microsoft on September 14, 2024 and sell it today you would earn a total of  2,521  from holding Microsoft or generate 5.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Microsoft  vs.  CC Neuberger Principal

Microsoft

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 4 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

CC Neuberger Principal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CC Neuberger Principal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CC Neuberger is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Microsoft and CC Neuberger

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

The idea behind Microsoft and CC Neuberger Principal 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 Global Correlations module to find global opportunities by holding instruments from different markets.