Correlation Between Microsoft and Pnc International

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

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

Diversification Opportunities for Microsoft and Pnc International

0.9

Correlation Coefficient

Microsoft  Pnc International

Almost no diversification

The 3 months correlation between Microsoft and Pnc is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Pnc International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pnc International Growth 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 Pnc International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pnc International Growth has no effect on the direction of Microsoft i.e., Microsoft and Pnc International go up and down completely randomly.

Pair Corralation between Microsoft and Pnc International

Given the investment horizon of 90 days Microsoft is expected to generate 1.49 times more return on investment than Pnc International. However, Microsoft is 1.49 times more volatile than Pnc International Growth. It trades about 0.32 of its potential returns per unit of risk. Pnc International Growth is currently generating about 0.09 per unit of risk. If you would invest  43,537  in Microsoft on May 5, 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	Very Strong
Accuracy	100.0%
Values	Daily Returns

Microsoft  vs.  Pnc International Growth

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.

Pnc International Growth

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pnc International Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Pnc International 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 Pnc International

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

The idea behind Microsoft and Pnc International Growth 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.