Correlation Between Shift4 Payments and Microsoft Corp

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.
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.

Diversification Opportunities for Shift4 Payments and Microsoft Corp

0.39
  Correlation Coefficient
Shift4 Payments
Microsoft Corp

Weak diversification

The 3 months correlation between Shift4 and Microsoft is 0.39. 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 under-perform the Microsoft Corp. In addition to that, Shift4 Payments is 2.85 times more volatile than Microsoft Corp. It trades about -0.13 of its total potential returns per unit of risk. Microsoft Corp is currently generating about 0.05 per unit of volatility. If you would invest  28,192  in Microsoft Corp on October 30, 2021 and sell it today you would earn a total of  1,792  from holding Microsoft Corp or generate 6.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
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 February 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 latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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

Other Complementary Tools

Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Go
Shere Portfolio
Track or share privately all of your investments from the convenience of any device
Go
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Go
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Go
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Go
Transaction History
View history of all your transactions and understand their impact on performance
Go
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Go
Fundamental Analysis
View fundamental data based on most recent published financial statements
Go