Correlation Between MicroStrategy Incorporated and Technology Fund

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

By analyzing existing cross correlation between MicroStrategy Incorporated 1000 and Technology Fund Class, you can compare the effects of market volatilities on MicroStrategy Incorporated and Technology Fund 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 MicroStrategy Incorporated with a short position of Technology Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroStrategy Incorporated and Technology Fund.

Diversification Opportunities for MicroStrategy Incorporated and Technology Fund

0.91

Correlation Coefficient

MicroStrategy Incorporated  Technology Fund

Almost no diversification

The 3 months correlation between MicroStrategy and Technology is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding MicroStrategy Incorporated 100 and Technology Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology Fund Class and MicroStrategy Incorporated 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 MicroStrategy Incorporated 1000 are associated (or correlated) with Technology Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology Fund Class has no effect on the direction of MicroStrategy Incorporated i.e., MicroStrategy Incorporated and Technology Fund go up and down completely randomly.

Pair Corralation between MicroStrategy Incorporated and Technology Fund

Given the investment horizon of 90 days MicroStrategy Incorporated 1000 is expected to generate 1.77 times more return on investment than Technology Fund. However, MicroStrategy Incorporated is 1.77 times more volatile than Technology Fund Class. It trades about 0.24 of its potential returns per unit of risk. Technology Fund Class is currently generating about 0.32 per unit of risk. If you would invest  8,983  in MicroStrategy Incorporated 1000 on May 1, 2025 and sell it today you would earn a total of  2,810  from holding MicroStrategy Incorporated 1000 or generate 31.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

MicroStrategy Incorporated 100  vs.  Technology Fund Class

MicroStrategy Incorporated

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MicroStrategy Incorporated 1000 are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, MicroStrategy Incorporated reported solid returns over the last few months and may actually be approaching a breakup point.

Technology Fund Class

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Technology Fund Class are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Technology Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MicroStrategy Incorporated and Technology Fund

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

The idea behind MicroStrategy Incorporated 1000 and Technology Fund Class 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.