Correlation Between Microsoft and Intel Corp

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

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

Diversification Opportunities for Microsoft and Intel Corp

0.33

Correlation Coefficient

Microsoft  Intel Corp

Weak diversification

The 3 months correlation between Microsoft and Intel is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Intel Corp CEDEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel Corp CEDEAR 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 Intel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel Corp CEDEAR has no effect on the direction of Microsoft i.e., Microsoft and Intel Corp go up and down completely randomly.

Pair Corralation between Microsoft and Intel Corp

Given the investment horizon of 90 days Microsoft is expected to generate 2.0 times less return on investment than Intel Corp. But when comparing it to its historical volatility, Microsoft is 2.86 times less risky than Intel Corp. It trades about 0.23 of its potential returns per unit of risk. Intel Corp CEDEAR is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  483,000  in Intel Corp CEDEAR on May 21, 2025 and sell it today you would earn a total of  134,000  from holding Intel Corp CEDEAR or generate 27.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Microsoft  vs.  Intel Corp CEDEAR

Microsoft

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 17 (%) 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.

Intel Corp CEDEAR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intel Corp CEDEAR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Intel Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and Intel Corp

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

The idea behind Microsoft and Intel Corp CEDEAR 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.