Correlation Between Microsoft and UNI

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

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

Diversification Opportunities for Microsoft and UNI

0.73

Correlation Coefficient

Microsoft  UNI

Poor diversification

The 3 months correlation between Microsoft and UNI is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and UNI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNI 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 UNI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNI has no effect on the direction of Microsoft i.e., Microsoft and UNI go up and down completely randomly.

Pair Corralation between Microsoft and UNI

Given the investment horizon of 90 days Microsoft is expected to generate 2.78 times less return on investment than UNI. But when comparing it to its historical volatility, Microsoft is 6.64 times less risky than UNI. It trades about 0.35 of its potential returns per unit of risk. UNI is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  582.00  in UNI on April 25, 2025 and sell it today you would earn a total of  437.00  from holding UNI or generate 75.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

Microsoft  vs.  UNI

Microsoft

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 27 (%) 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.

UNI

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UNI are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, UNI exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and UNI

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

The idea behind Microsoft and UNI 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.