Correlation Between Microsoft and Fidelity MSCI

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

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

Diversification Opportunities for Microsoft and Fidelity MSCI

0.66

Correlation Coefficient

Microsoft  Fidelity MSCI

Poor diversification

The 3 months correlation between Microsoft and Fidelity is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Fidelity MSCI Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity MSCI Information 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 Fidelity MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity MSCI Information has no effect on the direction of Microsoft i.e., Microsoft and Fidelity MSCI go up and down completely randomly.

Pair Corralation between Microsoft and Fidelity MSCI

Given the investment horizon of 90 days Microsoft is expected to generate 0.84 times more return on investment than Fidelity MSCI. However, Microsoft is 1.19 times less risky than Fidelity MSCI. It trades about 0.33 of its potential returns per unit of risk. Fidelity MSCI Information is currently generating about 0.27 per unit of risk. If you would invest  43,537  in Microsoft on May 4, 2025 and sell it today you would earn a total of  8,874  from holding Microsoft or generate 20.38% return on investment over 90 days.

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

Microsoft  vs.  Fidelity MSCI Information

Microsoft

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 25 (%) 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.

Fidelity MSCI Information

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity MSCI Information are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Fidelity MSCI exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and Fidelity MSCI

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

The idea behind Microsoft and Fidelity MSCI Information 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.