Correlation Between Microsoft and Inventiva

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

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

Diversification Opportunities for Microsoft and Inventiva

-0.52

Correlation Coefficient

Microsoft  Inventiva

Excellent diversification

The 3 months correlation between Microsoft and Inventiva is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Inventiva Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inventiva Sa 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 Inventiva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inventiva Sa has no effect on the direction of Microsoft i.e., Microsoft and Inventiva go up and down completely randomly.

Pair Corralation between Microsoft and Inventiva

Given the investment horizon of 90 days Microsoft is expected to generate 0.23 times more return on investment than Inventiva. However, Microsoft is 4.4 times less risky than Inventiva. It trades about 0.32 of its potential returns per unit of risk. Inventiva Sa is currently generating about -0.02 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 Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Microsoft  vs.  Inventiva Sa

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.

Inventiva Sa

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inventiva Sa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Inventiva 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 Inventiva

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

The idea behind Microsoft and Inventiva Sa 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.