Correlation Between Shift4 Payments and Microsoft
Can any of the company-specific risk be diversified away by investing in both Shift4 Payments 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 Shift4 Payments and Microsoft 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, you can compare the effects of market volatilities on Shift4 Payments 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 Shift4 Payments with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shift4 Payments and Microsoft.
Diversification Opportunities for Shift4 Payments and Microsoft
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Shift4 and Microsoft is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Shift4 Payments and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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. 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 Shift4 Payments i.e., Shift4 Payments and Microsoft go up and down completely randomly.
Pair Corralation between Shift4 Payments and Microsoft
Given the investment horizon of 90 days Shift4 Payments is expected to under-perform the Microsoft. In addition to that, Shift4 Payments is 1.25 times more volatile than Microsoft. It trades about -0.35 of its total potential returns per unit of risk. Microsoft is currently generating about -0.13 per unit of volatility. If you would invest 42,459 in Microsoft on February 6, 2024 and sell it today you would lose (1,793) from holding Microsoft or give up 4.22% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Shift4 Payments vs. Microsoft
Performance |
Timeline |
Shift4 Payments |
Microsoft |
Shift4 Payments and Microsoft Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shift4 Payments and Microsoft
The main advantage of trading using opposite Shift4 Payments and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shift4 Payments 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.Shift4 Payments vs. Expedia Group | Shift4 Payments vs. Trip Group Ltd | Shift4 Payments vs. Booking Holdings | Shift4 Payments vs. Despegar Corp |
Microsoft vs. Crowdstrike Holdings | Microsoft vs. Okta Inc | Microsoft vs. Cloudflare | Microsoft vs. MongoDB |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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