Correlation Between Safehold and Microsoft Corp

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

Diversification Opportunities for Safehold and Microsoft Corp

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Safehold and Microsoft is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Safehold and Microsoft Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft Corp and Safehold 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 Safehold 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 Safehold i.e., Safehold and Microsoft Corp go up and down completely randomly.

Pair Corralation between Safehold and Microsoft Corp

Given the investment horizon of 90 days Safehold is expected to under-perform the Microsoft Corp. In addition to that, Safehold is 2.06 times more volatile than Microsoft Corp. It trades about -0.27 of its total potential returns per unit of risk. Microsoft Corp is currently generating about -0.16 per unit of volatility. If you would invest  27,973  in Microsoft Corp on July 7, 2022 and sell it today you would lose (3,209)  from holding Microsoft Corp or give up 11.47% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Safehold  vs.  Microsoft Corp

 Performance (%) 
       Timeline  
Safehold 
Safehold Performance
0 of 100
Over the last 90 days Safehold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in November 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Safehold 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

Safehold and Microsoft Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Safehold and Microsoft Corp

The main advantage of trading using opposite Safehold and Microsoft Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safehold 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.
Safehold vs. WP Carey Co
The idea behind Safehold 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. Kennametal
Microsoft Corp vs. Misumi Group
Microsoft Corp vs. 361 Degrees International
Microsoft Corp vs. Yue Yuen Industrial
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

Other Complementary Tools

Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Go
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Go
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Go
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Go
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Go
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Go