Correlation Between Huntington Bancshares and Microsoft

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

Diversification Opportunities for Huntington Bancshares and Microsoft

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Huntington and Microsoft is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Bancshares Incorpor and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Huntington Bancshares 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 Huntington Bancshares Incorporated are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Huntington Bancshares i.e., Huntington Bancshares and Microsoft go up and down completely randomly.

Pair Corralation between Huntington Bancshares and Microsoft

Assuming the 90 days horizon Huntington Bancshares is expected to generate 2.48 times less return on investment than Microsoft. In addition to that, Huntington Bancshares is 1.05 times more volatile than Microsoft. It trades about 0.02 of its total potential returns per unit of risk. Microsoft is currently generating about 0.05 per unit of volatility. If you would invest  28,019  in Microsoft on December 30, 2023 and sell it today you would earn a total of  14,053  from holding Microsoft or generate 50.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Huntington Bancshares Incorpor  vs.  Microsoft

 Performance 
       Timeline  
Huntington Bancshares 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Huntington Bancshares Incorporated are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Huntington Bancshares may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Microsoft 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Microsoft unveiled solid returns over the last few months and may actually be approaching a breakup point.

Huntington Bancshares and Microsoft Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Huntington Bancshares and Microsoft

The main advantage of trading using opposite Huntington Bancshares and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntington Bancshares position performs unexpectedly, Microsoft 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 will offset losses from the drop in Microsoft's long position.
The idea behind Huntington Bancshares Incorporated and Microsoft 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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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 the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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