Correlation Between Microsoft and CDK Global
Can any of the company-specific risk be diversified away by investing in both Microsoft and CDK Global 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 and CDK Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and CDK Global Holdings, you can compare the effects of market volatilities on Microsoft and CDK Global 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 with a short position of CDK Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and CDK Global.
Diversification Opportunities for Microsoft and CDK Global
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and CDK is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and CDK Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDK Global Holdings and Microsoft 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 are associated (or correlated) with CDK Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDK Global Holdings has no effect on the direction of Microsoft i.e., Microsoft and CDK Global go up and down completely randomly.
Pair Corralation between Microsoft and CDK Global
If you would invest 5,476 in CDK Global Holdings on January 26, 2024 and sell it today you would earn a total of 0.00 from holding CDK Global Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Microsoft vs. CDK Global Holdings
Performance |
| Timeline |
| Microsoft |
| CDK Global Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and CDK Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and CDK Global
The main advantage of trading using opposite Microsoft and CDK Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, CDK Global 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 CDK Global will offset losses from the drop in CDK Global's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| CDK Global vs. Worthington Steel | CDK Global vs. Insteel Industries | CDK Global vs. CECO Environmental Corp | CDK Global vs. Bank of New |
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 the Equity Valuation module to check real value of public entities based on technical and fundamental data.
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