Correlation Between Microsoft and Calvert Moderate

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

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

Diversification Opportunities for Microsoft and Calvert Moderate

0.93

Correlation Coefficient

Microsoft  Calvert Moderate

Almost no diversification

The 3 months correlation between Microsoft and Calvert is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Calvert Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Moderate All 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 Calvert Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Moderate All has no effect on the direction of Microsoft i.e., Microsoft and Calvert Moderate go up and down completely randomly.

Pair Corralation between Microsoft and Calvert Moderate

Given the investment horizon of 90 days Microsoft is expected to generate 2.11 times more return on investment than Calvert Moderate. However, Microsoft is 2.11 times more volatile than Calvert Moderate Allocation. It trades about 0.26 of its potential returns per unit of risk. Calvert Moderate Allocation is currently generating about 0.17 per unit of risk. If you would invest  44,844  in Microsoft on May 11, 2025 and sell it today you would earn a total of  7,360  from holding Microsoft or generate 16.41% return on investment over 90 days.

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

Microsoft  vs.  Calvert Moderate Allocation

Microsoft

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 20 (%) 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.

Calvert Moderate All

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Moderate Allocation are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Calvert Moderate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Microsoft and Calvert Moderate

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

The idea behind Microsoft and Calvert Moderate Allocation 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.