Correlation Between Microsoft and Sobr Safe

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

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

Diversification Opportunities for Microsoft and Sobr Safe

0.46

Correlation Coefficient

Microsoft  Sobr Safe

Very weak diversification

The 3 months correlation between Microsoft and Sobr is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Sobr Safe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sobr Safe 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 Sobr Safe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sobr Safe has no effect on the direction of Microsoft i.e., Microsoft and Sobr Safe go up and down completely randomly.

Pair Corralation between Microsoft and Sobr Safe

Given the investment horizon of 90 days Microsoft is expected to generate 1.09 times less return on investment than Sobr Safe. But when comparing it to its historical volatility, Microsoft is 8.18 times less risky than Sobr Safe. It trades about 0.32 of its potential returns per unit of risk. Sobr Safe is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  350.00  in Sobr Safe on May 5, 2025 and sell it today you would earn a total of  17.00  from holding Sobr Safe or generate 4.86% return on investment over 90 days.

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

Microsoft  vs.  Sobr Safe

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.

Sobr Safe

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sobr Safe are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental drivers, Sobr Safe reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and Sobr Safe

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

The idea behind Microsoft and Sobr Safe 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.