Correlation Between Microsoft and EverCommerce

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

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

Diversification Opportunities for Microsoft and EverCommerce

0.48

Correlation Coefficient

Microsoft  EverCommerce

Very weak diversification

The 3 months correlation between Microsoft and EverCommerce is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and EverCommerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EverCommerce 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 EverCommerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EverCommerce has no effect on the direction of Microsoft i.e., Microsoft and EverCommerce go up and down completely randomly.

Pair Corralation between Microsoft and EverCommerce

Given the investment horizon of 90 days Microsoft is expected to generate 1.17 times less return on investment than EverCommerce. But when comparing it to its historical volatility, Microsoft is 2.94 times less risky than EverCommerce. It trades about 0.32 of its potential returns per unit of risk. EverCommerce is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,055  in EverCommerce on May 2, 2025 and sell it today you would earn a total of  50.00  from holding EverCommerce or generate 4.74% return on investment over 90 days.

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

Microsoft  vs.  EverCommerce

Microsoft

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 28 (%) 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.

EverCommerce

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EverCommerce are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, EverCommerce may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Microsoft and EverCommerce

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

The idea behind Microsoft and EverCommerce 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.