Correlation Between Microsoft and Mmngx

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

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

Diversification Opportunities for Microsoft and Mmngx

0.87

Correlation Coefficient

Microsoft  Mmngx

Very poor diversification

The 3 months correlation between Microsoft and Mmngx is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Mmngx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mmngx 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 Mmngx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mmngx has no effect on the direction of Microsoft i.e., Microsoft and Mmngx go up and down completely randomly.

Pair Corralation between Microsoft and Mmngx

Given the investment horizon of 90 days Microsoft is expected to generate 1.14 times more return on investment than Mmngx. However, Microsoft is 1.14 times more volatile than Mmngx. It trades about 0.23 of its potential returns per unit of risk. Mmngx is currently generating about 0.05 per unit of risk. If you would invest  45,427  in Microsoft on May 16, 2025 and sell it today you would earn a total of  6,821  from holding Microsoft or generate 15.02% return on investment over 90 days.

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

Microsoft  vs.  Mmngx

Microsoft

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 18 (%) 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.

Mmngx

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Mmngx are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Mmngx 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 Mmngx

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

The idea behind Microsoft and Mmngx 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.