Correlation Between Workday and Microchip Technology

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

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

Diversification Opportunities for Workday and Microchip Technology

-0.27

Correlation Coefficient

Workday  Microchip Technology

Very good diversification

The 3 months correlation between Workday and Microchip is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Workday and Microchip Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microchip Technology and Workday 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 Workday are associated (or correlated) with Microchip Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microchip Technology has no effect on the direction of Workday i.e., Workday and Microchip Technology go up and down completely randomly.

Pair Corralation between Workday and Microchip Technology

Given the investment horizon of 90 days Workday is expected to under-perform the Microchip Technology. But the stock apears to be less risky and, when comparing its historical volatility, Workday is 1.09 times less risky than Microchip Technology. The stock trades about -0.12 of its potential returns per unit of risk. The Microchip Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6,010  in Microchip Technology on May 19, 2025 and sell it today you would earn a total of  561.00  from holding Microchip Technology or generate 9.33% return on investment over 90 days.

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

Workday  vs.  Microchip Technology

Workday

Risk-Adjusted Performance

Weakest

Over the last 90 days Workday has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Microchip Technology

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Microchip Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical indicators, Microchip Technology may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Workday and Microchip Technology

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

The idea behind Workday and Microchip Technology 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.