Correlation Between Microsoft and Spark Networks

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Can any of the company-specific risk be diversified away by investing in both Microsoft and Spark Networks 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 Spark Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Spark Networks SE, you can compare the effects of market volatilities on Microsoft and Spark Networks 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 Spark Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Spark Networks.

Diversification Opportunities for Microsoft and Spark Networks

-0.69
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Microsoft and Spark is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Spark Networks SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spark Networks SE 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 Spark Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spark Networks SE has no effect on the direction of Microsoft i.e., Microsoft and Spark Networks go up and down completely randomly.

Pair Corralation between Microsoft and Spark Networks

If you would invest  40,748  in Microsoft on December 29, 2023 and sell it today you would earn a total of  1,395  from holding Microsoft or generate 3.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy4.55%
ValuesDaily Returns

Microsoft  vs.  Spark Networks SE

 Performance 
       Timeline  
Microsoft 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Microsoft may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Spark Networks SE 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Spark Networks SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Spark Networks is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Microsoft and Spark Networks Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Microsoft and Spark Networks

The main advantage of trading using opposite Microsoft and Spark Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Spark Networks 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 Spark Networks will offset losses from the drop in Spark Networks' long position.
The idea behind Microsoft and Spark Networks SE 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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