Correlation Between Box and Microsoft Corp

By analyzing existing cross correlation between Box Inc and Microsoft Corp, you can compare the effects of market volatilities on Box 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 Box with a short position of Microsoft Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Box and Microsoft Corp.

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Can any of the company-specific risk be diversified away by investing in both Box 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 Box and Microsoft Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for Box and Microsoft Corp

0.33
  Correlation Coefficient
Box Inc
Microsoft Corp

Weak diversification

The 3 months correlation between Box and Microsoft is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Box Inc and Microsoft Corp in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Microsoft Corp and Box 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 Box Inc 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 Box i.e., Box and Microsoft Corp go up and down completely randomly.

Pair Corralation between Box and Microsoft Corp

Considering the 90-day investment horizon Box is expected to generate 1.41 times less return on investment than Microsoft Corp. In addition to that, Box is 1.38 times more volatile than Microsoft Corp. It trades about 0.04 of its total potential returns per unit of risk. Microsoft Corp is currently generating about 0.08 per unit of volatility. If you would invest  15,319  in Microsoft Corp on September 4, 2021 and sell it today you would earn a total of  17,630  from holding Microsoft Corp or generate 115.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Box Inc  vs.  Microsoft Corp

 Performance (%) 
      Timeline 
Box Inc 
Box Performance
0 of 100
Over the last 90 days Box Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Box is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Box Price Channel

Microsoft Corp 
Microsoft Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Microsoft Corp may actually be approaching a critical reversion point that can send shares even higher in January 2022.

Microsoft Price Channel

Box and Microsoft Corp Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Box and Microsoft Corp

The main advantage of trading using opposite Box and Microsoft Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Box 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.

Box Inc

Pair trading matchups for Box

The idea behind Box Inc 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

Pair trading matchups for Microsoft Corp

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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