Correlation Between Microsoft and BrightView Holdings

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

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

Diversification Opportunities for Microsoft and BrightView Holdings

-0.42

Correlation Coefficient

Microsoft  BrightView Holdings

Very good diversification

The 3 months correlation between Microsoft and BrightView is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and BrightView Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrightView Holdings 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 BrightView Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrightView Holdings has no effect on the direction of Microsoft i.e., Microsoft and BrightView Holdings go up and down completely randomly.

Pair Corralation between Microsoft and BrightView Holdings

Given the investment horizon of 90 days Microsoft is expected to generate 0.45 times more return on investment than BrightView Holdings. However, Microsoft is 2.22 times less risky than BrightView Holdings. It trades about 0.21 of its potential returns per unit of risk. BrightView Holdings is currently generating about -0.07 per unit of risk. If you would invest  45,887  in Microsoft on May 18, 2025 and sell it today you would earn a total of  6,130  from holding Microsoft or generate 13.36% return on investment over 90 days.

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

Microsoft  vs.  BrightView Holdings

Microsoft

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 16 (%) 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.

BrightView Holdings

Risk-Adjusted Performance

Weakest

Over the last 90 days BrightView Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Microsoft and BrightView Holdings

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

The idea behind Microsoft and BrightView Holdings 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.