Correlation Between Microsoft and Target Logistics

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

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

Diversification Opportunities for Microsoft and Target Logistics

0.0

Correlation Coefficient

Microsoft  Target Logistics

Pay attention - limited upside

The 3 months correlation between Microsoft and Target is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Target Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Logistics 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 Target Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Logistics has no effect on the direction of Microsoft i.e., Microsoft and Target Logistics go up and down completely randomly.

Pair Corralation between Microsoft and Target Logistics

If you would invest  43,264  in Microsoft on September 23, 2024 and sell it today you would earn a total of  396.00  from holding Microsoft or generate 0.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Microsoft  vs.  Target Logistics

Microsoft

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 1 (%) 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.

Target Logistics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Target Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Target Logistics is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Microsoft and Target Logistics

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

The idea behind Microsoft and Target Logistics 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.