Correlation Between Microsoft Corp and Hubspot

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

Diversification Opportunities for Microsoft Corp and Hubspot

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Microsoft and Hubspot is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp and Hubspot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubspot 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 Hubspot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubspot has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and Hubspot go up and down completely randomly.

Pair Corralation between Microsoft Corp and Hubspot

Given the investment horizon of 90 days Microsoft Corp is expected to generate 0.46 times more return on investment than Hubspot. However, Microsoft Corp is 2.18 times less risky than Hubspot. It trades about 0.14 of its potential returns per unit of risk. Hubspot is currently generating about 0.02 per unit of risk. If you would invest  23,148  in Microsoft Corp on August 30, 2022 and sell it today you would earn a total of  1,601  from holding Microsoft Corp or generate 6.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.24%
ValuesDaily Returns

Microsoft Corp  vs.  Hubspot

 Performance (%) 
       Timeline  
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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Microsoft Price Channel

Hubspot 
Hubspot Performance
0 of 100
Over the last 90 days Hubspot has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest sluggish performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Hubspot Price Channel

Microsoft Corp and Hubspot Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Microsoft Corp and Hubspot

The main advantage of trading using opposite Microsoft Corp and Hubspot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft Corp position performs unexpectedly, Hubspot 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 Hubspot will offset losses from the drop in Hubspot's long position.
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The idea behind Microsoft Corp and Hubspot 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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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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