Correlation Between Twitter and Microsoft Corp

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Twitter and Microsoft Corp 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 Twitter and Microsoft Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Twitter and Microsoft Corp, you can compare the effects of market volatilities on Twitter and Microsoft Corp 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 Twitter with a short position of Microsoft Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Twitter and Microsoft Corp.

Diversification Opportunities for Twitter and Microsoft Corp

0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between Twitter and Microsoft is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Twitter and Microsoft Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft Corp and Twitter 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 Twitter are associated (or correlated) with Microsoft Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft Corp has no effect on the direction of Twitter i.e., Twitter and Microsoft Corp go up and down completely randomly.

Pair Corralation between Twitter and Microsoft Corp

Given the investment horizon of 90 days Twitter is expected to generate 1.92 times more return on investment than Microsoft Corp. However, Twitter is 1.92 times more volatile than Microsoft Corp. It trades about 0.01 of its potential returns per unit of risk. Microsoft Corp is currently generating about 0.02 per unit of risk. If you would invest  4,590  in Twitter on July 1, 2022 and sell it today you would lose (319.00)  from holding Twitter or give up 6.95% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Twitter  vs.  Microsoft Corp

 Performance (%) 
       Timeline  
Twitter 
Twitter Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Twitter are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Twitter reported solid returns over the last few months and may actually be approaching a breakup point.

Twitter Price Channel

Microsoft Corp 
Microsoft Performance
0 of 100
Over the last 90 days Microsoft Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest sluggish performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Microsoft Price Channel

Twitter and Microsoft Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Twitter and Microsoft Corp

The main advantage of trading using opposite Twitter and Microsoft Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Twitter position performs unexpectedly, Microsoft Corp 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 Microsoft Corp will offset losses from the drop in Microsoft Corp's long position.
Twitter vs. Tencent Holdings
The idea behind Twitter and Microsoft Corp 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.
Microsoft Corp vs. Asml Holdings NY
Microsoft Corp vs. ASM INTERNATIONAL NV
Microsoft Corp vs. James Hardie Industries
Microsoft Corp vs. Teradyne
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

Other Complementary Tools

Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Price Transformation
Use Price Transformation models to analyze depth of different equity instruments across global markets
Go
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Go
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Go
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Go
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Go
Fund Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Go
Piotroski F Score
Get Piotroski F Score based on binary analysis strategy of nine different fundamentals
Go
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Go
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Go
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Go
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Go