Correlation Between Microsoft and Bullet Blockchain

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

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

Diversification Opportunities for Microsoft and Bullet Blockchain

0.51

Correlation Coefficient

Microsoft  Bullet Blockchain

Very weak diversification

The 3 months correlation between Microsoft and Bullet is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Bullet Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bullet Blockchain 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 Bullet Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bullet Blockchain has no effect on the direction of Microsoft i.e., Microsoft and Bullet Blockchain go up and down completely randomly.

Pair Corralation between Microsoft and Bullet Blockchain

Given the investment horizon of 90 days Microsoft is expected to generate 4.92 times less return on investment than Bullet Blockchain. But when comparing it to its historical volatility, Microsoft is 18.5 times less risky than Bullet Blockchain. It trades about 0.38 of its potential returns per unit of risk. Bullet Blockchain is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4.26  in Bullet Blockchain on May 2, 2025 and sell it today you would earn a total of  1.35  from holding Bullet Blockchain or generate 31.69% return on investment over 90 days.

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

Microsoft  vs.  Bullet Blockchain

Microsoft

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Microsoft unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bullet Blockchain

Risk-Adjusted Performance

OK

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

Pair Trading with Microsoft and Bullet Blockchain

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

The idea behind Microsoft and Bullet Blockchain 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.