Correlation Between Southern and Microsoft

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Southern and Microsoft 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 Southern and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Co and Microsoft, you can compare the effects of market volatilities on Southern and Microsoft 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 Southern with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern and Microsoft.

Diversification Opportunities for Southern and Microsoft

-0.28
  Correlation Coefficient

Very good diversification

The 3 months correlation between Southern and Microsoft is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Southern Co and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Southern 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 Southern Co are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Southern i.e., Southern and Microsoft go up and down completely randomly.

Pair Corralation between Southern and Microsoft

If you would invest  40,748  in Microsoft on December 29, 2023 and sell it today you would earn a total of  1,324  from holding Microsoft or generate 3.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy4.35%
ValuesDaily Returns

Southern Co  vs.  Microsoft

 Performance 
       Timeline  
Southern 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Southern Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Southern is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.
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.

Southern and Microsoft Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Southern and Microsoft

The main advantage of trading using opposite Southern and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.
The idea behind Southern Co and Microsoft 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

Other Complementary Tools

Piotroski F Score
Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Sectors
List of equity sectors categorizing publicly traded companies based on their primary business activities
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes