Correlation Between Microsoft and Vishay Intertechnology

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

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

Diversification Opportunities for Microsoft and Vishay Intertechnology

0.84

Correlation Coefficient

Microsoft  Vishay Intertechnology

Very poor diversification

The 3 months correlation between Microsoft and Vishay is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Vishay Intertechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Intertechnology 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 Vishay Intertechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Intertechnology has no effect on the direction of Microsoft i.e., Microsoft and Vishay Intertechnology go up and down completely randomly.

Pair Corralation between Microsoft and Vishay Intertechnology

Assuming the 90 days trading horizon Microsoft is expected to generate 1.11 times less return on investment than Vishay Intertechnology. But when comparing it to its historical volatility, Microsoft is 2.83 times less risky than Vishay Intertechnology. It trades about 0.24 of its potential returns per unit of risk. Vishay Intertechnology is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,174  in Vishay Intertechnology on May 6, 2025 and sell it today you would earn a total of  204.00  from holding Vishay Intertechnology or generate 17.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Microsoft  vs.  Vishay Intertechnology

Microsoft

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Microsoft displayed solid returns over the last few months and may actually be approaching a breakup point.

Vishay Intertechnology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vishay Intertechnology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vishay Intertechnology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and Vishay Intertechnology

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

The idea behind Microsoft and Vishay Intertechnology 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.