Correlation Between Microsoft and Apple Hospitality

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

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

Diversification Opportunities for Microsoft and Apple Hospitality

-0.3

Correlation Coefficient

Microsoft  Apple Hospitality

Very good diversification

The 3 months correlation between Microsoft and Apple is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Apple Hospitality REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Hospitality REIT 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 Apple Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Hospitality REIT has no effect on the direction of Microsoft i.e., Microsoft and Apple Hospitality go up and down completely randomly.

Pair Corralation between Microsoft and Apple Hospitality

Given the investment horizon of 90 days Microsoft is expected to generate 0.69 times more return on investment than Apple Hospitality. However, Microsoft is 1.44 times less risky than Apple Hospitality. It trades about 0.07 of its potential returns per unit of risk. Apple Hospitality REIT is currently generating about 0.02 per unit of risk. If you would invest  49,802  in Microsoft on July 3, 2025 and sell it today you would earn a total of  2,169  from holding Microsoft or generate 4.36% return on investment over 90 days.

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

Microsoft  vs.  Apple Hospitality REIT

Microsoft

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 5 (%) 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Apple Hospitality REIT

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Hospitality REIT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Apple Hospitality is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Microsoft and Apple Hospitality

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

The idea behind Microsoft and Apple Hospitality REIT 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.