Correlation Between Microsoft Corp and Doubleverify Holdings

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

Diversification Opportunities for Microsoft Corp and Doubleverify Holdings

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Microsoft and Doubleverify is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp and Doubleverify Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doubleverify Holdings and Microsoft Corp 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 Microsoft Corp are associated (or correlated) with Doubleverify Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doubleverify Holdings has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and Doubleverify Holdings go up and down completely randomly.

Pair Corralation between Microsoft Corp and Doubleverify Holdings

Given the investment horizon of 90 days Microsoft Corp is expected to generate 1.69 times less return on investment than Doubleverify Holdings. But when comparing it to its historical volatility, Microsoft Corp is 1.42 times less risky than Doubleverify Holdings. It trades about 0.19 of its potential returns per unit of risk. Doubleverify Holdings is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,371  in Doubleverify Holdings on May 12, 2022 and sell it today you would earn a total of  379.00  from holding Doubleverify Holdings or generate 15.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Microsoft Corp  vs.  Doubleverify Holdings

 Performance (%) 
       Timeline  
Microsoft Corp 
Microsoft Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Microsoft Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Microsoft Price Channel

Doubleverify Holdings 
Doubleverify Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Doubleverify Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Doubleverify Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Doubleverify Price Channel

Microsoft Corp and Doubleverify Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Microsoft Corp and Doubleverify Holdings

The main advantage of trading using opposite Microsoft Corp and Doubleverify Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft Corp position performs unexpectedly, Doubleverify Holdings 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 Doubleverify Holdings will offset losses from the drop in Doubleverify Holdings' long position.
The idea behind Microsoft Corp and Doubleverify Holdings 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.

Doubleverify Holdings

Pair trading matchups for Doubleverify Holdings

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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