Correlation Between Graphic Packaging and Microsoft Corp

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

Diversification Opportunities for Graphic Packaging and Microsoft Corp

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Graphic and Microsoft is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Graphic Packaging Holding and Microsoft Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft Corp and Graphic Packaging 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 Graphic Packaging Holding 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 Graphic Packaging i.e., Graphic Packaging and Microsoft Corp go up and down completely randomly.

Pair Corralation between Graphic Packaging and Microsoft Corp

Considering the 90-day investment horizon Graphic Packaging Holding is expected to under-perform the Microsoft Corp. In addition to that, Graphic Packaging is 1.32 times more volatile than Microsoft Corp. It trades about -0.32 of its total potential returns per unit of risk. Microsoft Corp is currently generating about -0.32 per unit of volatility. If you would invest  26,523  in Microsoft Corp on June 29, 2022 and sell it today you would lose (2,778)  from holding Microsoft Corp or give up 10.47% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Graphic Packaging Holding  vs.  Microsoft Corp

 Performance (%) 
       Timeline  
Graphic Packaging Holding 
Graphic Performance
0 of 100
Over the last 90 days Graphic Packaging Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Graphic Packaging is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Graphic 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 weak 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

Graphic Packaging and Microsoft Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Graphic Packaging and Microsoft Corp

The main advantage of trading using opposite Graphic Packaging and Microsoft Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graphic Packaging 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.
Graphic Packaging vs. Kibush Capital Corp
The idea behind Graphic Packaging Holding 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. Kibush Capital Corp
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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