Correlation Between Microsoft Corp and Informatica Inc

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

Diversification Opportunities for Microsoft Corp and Informatica Inc

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Microsoft and Informatica is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp and Informatica Inc Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Informatica Inc 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 Informatica Inc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Informatica Inc has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and Informatica Inc go up and down completely randomly.

Pair Corralation between Microsoft Corp and Informatica Inc

Given the investment horizon of 90 days Microsoft Corp is expected to generate 1.02 times more return on investment than Informatica Inc. However, Microsoft Corp is 1.02 times more volatile than Informatica Inc Cl. It trades about 0.18 of its potential returns per unit of risk. Informatica Inc Cl is currently generating about -0.16 per unit of risk. If you would invest  22,611  in Microsoft Corp on August 28, 2022 and sell it today you would earn a total of  2,138  from holding Microsoft Corp or generate 9.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Microsoft Corp  vs.  Informatica Inc Cl

 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Microsoft Price Channel

Informatica Inc 
Informatica Performance
0 of 100
Over the last 90 days Informatica Inc Cl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite sluggish performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in December 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Informatica Price Channel

Microsoft Corp and Informatica Inc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Microsoft Corp and Informatica Inc

The main advantage of trading using opposite Microsoft Corp and Informatica Inc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft Corp position performs unexpectedly, Informatica Inc 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 Informatica Inc will offset losses from the drop in Informatica Inc's long position.
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The idea behind Microsoft Corp and Informatica Inc Cl 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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