Correlation Between Merger Fund and Microsoft Corp

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

Diversification Opportunities for Merger Fund and Microsoft Corp

0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between Merger and Microsoft is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Merger Fund and Microsoft Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft Corp and Merger Fund 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 Merger Fund 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 Merger Fund i.e., Merger Fund and Microsoft Corp go up and down completely randomly.

Pair Corralation between Merger Fund and Microsoft Corp

Assuming the 90 days horizon Merger Fund is expected to generate 9.23 times less return on investment than Microsoft Corp. But when comparing it to its historical volatility, Merger Fund is 16.45 times less risky than Microsoft Corp. It trades about 0.03 of its potential returns per unit of risk. Microsoft Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  24,006  in Microsoft Corp on September 1, 2022 and sell it today you would earn a total of  27.00  from holding Microsoft Corp or generate 0.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Merger Fund  vs.  Microsoft Corp

 Performance (%) 
       Timeline  
Merger Fund 
Merger Performance
0 of 100
Over the last 90 days Merger Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Merger Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Merger 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 comparatively stable technical and fundamental indicators, Microsoft Corp is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Microsoft Price Channel

Merger Fund and Microsoft Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Merger Fund and Microsoft Corp

The main advantage of trading using opposite Merger Fund and Microsoft Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merger Fund 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.
Merger Fund vs. Blackrock Large Cap
The idea behind Merger Fund 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. Intuit Inc
Microsoft Corp vs. Mind CTI
Microsoft Corp vs. Autodesk
Microsoft Corp vs. Fiserv Inc
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

Other Complementary Tools

Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Go
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go
Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go