Correlation Between Microsoft Corp and Nuveen Santa

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

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

Diversification Opportunities for Microsoft Corp and Nuveen Santa

0.72
  Correlation Coefficient
Microsoft Corp
Nuveen Santa Barbara

Poor diversification

The 3 months correlation between Microsoft and Nuveen is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp and Nuveen Santa Barbara in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Santa Barbara and Microsoft Corp 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 Microsoft Corp are associated (or correlated) with Nuveen Santa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Santa Barbara has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and Nuveen Santa go up and down completely randomly.

Pair Corralation between Microsoft Corp and Nuveen Santa

Given the investment horizon of 90 days Microsoft Corp is expected to generate 1.06 times less return on investment than Nuveen Santa. In addition to that, Microsoft Corp is 1.81 times more volatile than Nuveen Santa Barbara. It trades about 0.12 of its total potential returns per unit of risk. Nuveen Santa Barbara is currently generating about 0.22 per unit of volatility. If you would invest  3,272  in Nuveen Santa Barbara on July 24, 2021 and sell it today you would earn a total of  128.00  from holding Nuveen Santa Barbara or generate 3.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Microsoft Corp  vs.  Nuveen Santa Barbara

 Performance (%) 
      Timeline 
Microsoft Corp 
 Microsoft Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Microsoft Corp may actually be approaching a critical reversion point that can send shares even higher in November 2021.

Microsoft Price Channel

Nuveen Santa Barbara 
 Nuveen Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Santa Barbara are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nuveen Santa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Microsoft Corp and Nuveen Santa Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Microsoft Corp and Nuveen Santa

The main advantage of trading using opposite Microsoft Corp and Nuveen Santa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft Corp position performs unexpectedly, Nuveen Santa 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 Nuveen Santa will offset losses from the drop in Nuveen Santa's long position.
The idea behind Microsoft Corp and Nuveen Santa Barbara 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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