Correlation Between Shift4 Payments and Microsoft Corp

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Shift4 Payments 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 Shift4 Payments and Microsoft Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shift4 Payments and Microsoft Corp, you can compare the effects of market volatilities on Shift4 Payments 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 Shift4 Payments with a short position of Microsoft Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shift4 Payments and Microsoft Corp.

Diversification Opportunities for Shift4 Payments and Microsoft Corp

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Shift4 and Microsoft is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Shift4 Payments and Microsoft Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft Corp and Shift4 Payments 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 Shift4 Payments 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 Shift4 Payments i.e., Shift4 Payments and Microsoft Corp go up and down completely randomly.

Pair Corralation between Shift4 Payments and Microsoft Corp

Given the investment horizon of 90 days Shift4 Payments is expected to generate 2.39 times more return on investment than Microsoft Corp. However, Shift4 Payments is 2.39 times more volatile than Microsoft Corp. It trades about 0.02 of its potential returns per unit of risk. Microsoft Corp is currently generating about 0.04 per unit of risk. If you would invest  3,939  in Shift4 Payments on March 27, 2022 and sell it today you would lose (185.00)  from holding Shift4 Payments or give up 4.7% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Shift4 Payments  vs.  Microsoft Corp

 Performance (%) 
      Timeline 
Shift4 Payments 
Shift4 Performance
0 of 100
Over the last 90 days Shift4 Payments has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in July 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Shift4 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 weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in July 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0096
Payout Ratio
0.26
Last Split Factor
2:1
Forward Annual Dividend Rate
2.48
Dividend Date
2022-06-09
Ex Dividend Date
2022-08-17
Last Split Date
2003-02-18

Microsoft Price Channel

Shift4 Payments and Microsoft Corp Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Shift4 Payments and Microsoft Corp

The main advantage of trading using opposite Shift4 Payments and Microsoft Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shift4 Payments 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.
The idea behind Shift4 Payments 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.
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

Other Complementary Tools

Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Go
Fundamental Analysis
View fundamental data based on most recent published financial statements
Go
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Go