Correlation Between Microsoft and General Cannabis

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

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

Diversification Opportunities for Microsoft and General Cannabis

0.13

Correlation Coefficient

Microsoft  General Cannabis

Average diversification

The 3 months correlation between Microsoft and General is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and General Cannabis Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Cannabis Corp 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 General Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Cannabis Corp has no effect on the direction of Microsoft i.e., Microsoft and General Cannabis go up and down completely randomly.

Pair Corralation between Microsoft and General Cannabis

Given the investment horizon of 90 days Microsoft is expected to under-perform the General Cannabis. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 16.56 times less risky than General Cannabis. The stock trades about -0.06 of its potential returns per unit of risk. The General Cannabis Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2.98  in General Cannabis Corp on May 28, 2025 and sell it today you would earn a total of  0.51  from holding General Cannabis Corp or generate 17.11% return on investment over 90 days.

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

Microsoft  vs.  General Cannabis Corp

Microsoft

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Microsoft may actually be approaching a critical reversion point that can send shares even higher in September 2025.

General Cannabis Corp

Risk-Adjusted Performance

Fair

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

Pair Trading with Microsoft and General Cannabis

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

The idea behind Microsoft and General Cannabis Corp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.