Correlation Between Dividend and Microsoft CDR

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

By analyzing existing cross correlation between Dividend 15 Split and Microsoft CDR, you can compare the effects of market volatilities on Dividend and Microsoft CDR 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 Dividend with a short position of Microsoft CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dividend and Microsoft CDR.

Diversification Opportunities for Dividend and Microsoft CDR

-0.44

Correlation Coefficient

Dividend  Microsoft CDR

Very good diversification

The 3 months correlation between Dividend and Microsoft is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Dividend 15 Split and Microsoft CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft CDR and Dividend 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 Dividend 15 Split are associated (or correlated) with Microsoft CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft CDR has no effect on the direction of Dividend i.e., Dividend and Microsoft CDR go up and down completely randomly.

Pair Corralation between Dividend and Microsoft CDR

Assuming the 90 days trading horizon Dividend 15 Split is expected to generate 0.58 times more return on investment than Microsoft CDR. However, Dividend 15 Split is 1.71 times less risky than Microsoft CDR. It trades about 0.33 of its potential returns per unit of risk. Microsoft CDR is currently generating about -0.02 per unit of risk. If you would invest  628.00  in Dividend 15 Split on September 10, 2025 and sell it today you would earn a total of  97.00  from holding Dividend 15 Split or generate 15.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dividend 15 Split  vs.  Microsoft CDR

Dividend 15 Split

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Dividend 15 Split are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dividend displayed solid returns over the last few months and may actually be approaching a breakup point.

Microsoft CDR

Risk-Adjusted Performance

Weakest

Over the last 90 days Microsoft CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Microsoft CDR is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Dividend and Microsoft CDR

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

The idea behind Dividend 15 Split and Microsoft CDR 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.