Correlation Analysis Between Red Hat and Microsoft

This module allows you to analyze existing cross correlation between Red Hat and Microsoft Corporation. You can compare the effects of market volatilities on Red Hat 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 Red Hat with a short position of Microsoft. See also your portfolio center. Please also check ongoing floating volatility patterns of Red Hat and Microsoft.
 Time Horizon     30 Days    Login   to change
Symbolsvs

Red Hat Inc  vs.  Microsoft Corp.

 Performance (%) 
      Timeline 

Pair Volatility

Considering 30-days investment horizon, Red Hat is expected to generate 1.6 times more return on investment than Microsoft. However, Red Hat is 1.6 times more volatile than Microsoft Corporation. It trades about 0.26 of its potential returns per unit of risk. Microsoft Corporation is currently generating about 0.16 per unit of risk. If you would invest  16,299  in Red Hat on May 19, 2018 and sell it today you would earn a total of  1,101  from holding Red Hat or generate 6.76% return on investment over 30 days.

Pair Corralation between Red Hat and Microsoft

0.87
Time Period1 Month [change]
DirectionPositive 
StrengthStrong
Accuracy95.24%
ValuesDaily Returns

Diversification

Very poor diversification

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

Comparative Volatility

 Predicted Return Density 
      Returns 
Red Hat  
17 

Risk-Adjusted Performance

Compared to the overall equity markets, risk-adjusted returns on investments in Red Hat are ranked lower than 17 (%) of all global equities and portfolios over the last 30 days.
Microsoft  
10 

Risk-Adjusted Performance

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft Corporation are ranked lower than 10 (%) of all global equities and portfolios over the last 30 days.

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GOOG - USA Stock
Alphabet
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IT, Search Cloud And Integrated IT Services
Business Address1600 Amphitheatre Parkway
ExchangeNASDAQ
$1170.64

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See also your portfolio center. Please also try Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.