Correlation Between Microsoft and Multi Index

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

By analyzing existing cross correlation between Microsoft and Multi Index 2060 Lifetime, you can compare the effects of market volatilities on Microsoft and Multi Index 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 Multi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Multi Index.

Diversification Opportunities for Microsoft and Multi Index

0.6

Correlation Coefficient

Microsoft  Multi Index

Poor diversification

The 3 months correlation between Microsoft and Multi is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Multi Index 2060 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2060 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 Multi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2060 has no effect on the direction of Microsoft i.e., Microsoft and Multi Index go up and down completely randomly.

Pair Corralation between Microsoft and Multi Index

Given the investment horizon of 90 days Microsoft is expected to generate 1.66 times more return on investment than Multi Index. However, Microsoft is 1.66 times more volatile than Multi Index 2060 Lifetime. It trades about 0.23 of its potential returns per unit of risk. Multi Index 2060 Lifetime is currently generating about 0.24 per unit of risk. If you would invest  45,257  in Microsoft on May 21, 2025 and sell it today you would earn a total of  6,453  from holding Microsoft or generate 14.26% return on investment over 90 days.

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

Microsoft  vs.  Multi Index 2060 Lifetime

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.

Multi Index 2060

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Index 2060 Lifetime are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Multi Index may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Microsoft and Multi Index

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

The idea behind Microsoft and Multi Index 2060 Lifetime 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.