Correlation Between Microsoft and Minerva Surgical

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

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

Diversification Opportunities for Microsoft and Minerva Surgical

-0.13

Correlation Coefficient

Microsoft  Minerva Surgical

Good diversification

The 3 months correlation between Microsoft and Minerva is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Minerva Surgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerva Surgical 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 Minerva Surgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerva Surgical has no effect on the direction of Microsoft i.e., Microsoft and Minerva Surgical go up and down completely randomly.

Pair Corralation between Microsoft and Minerva Surgical

Given the investment horizon of 90 days Microsoft is expected to generate 7.54 times less return on investment than Minerva Surgical. But when comparing it to its historical volatility, Microsoft is 9.18 times less risky than Minerva Surgical. It trades about 0.08 of its potential returns per unit of risk. Minerva Surgical is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Minerva Surgical on September 2, 2024 and sell it today you would earn a total of  7.00  from holding Minerva Surgical or generate 36.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	31.05%
Values	Daily Returns

Microsoft  vs.  Minerva Surgical

Microsoft

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 3 (%) 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.

Minerva Surgical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Minerva Surgical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Minerva Surgical is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Microsoft and Minerva Surgical

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

The idea behind Microsoft and Minerva Surgical 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.