# Correlation Between Microsoft and ATT

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

## Diversification Opportunities for Microsoft and ATT

 0.39 Correlation Coefficient

### Weak diversification

The 3 months correlation between Microsoft and ATT is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Microsoft 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 are associated (or correlated) with ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Microsoft i.e., Microsoft and ATT go up and down completely randomly.

## Pair Corralation between Microsoft and ATT

Given the investment horizon of 90 days Microsoft is expected to generate 0.99 times more return on investment than ATT. However, Microsoft is 1.01 times less risky than ATT. It trades about 0.06 of its potential returns per unit of risk. ATT Inc is currently generating about -0.2 per unit of risk. If you would invest  41,046  in Microsoft on December 4, 2023 and sell it today you would earn a total of  504.00  from holding Microsoft or generate 1.23% return on investment over 90 days.
 Time Period 3 Months [change] Direction Moves Together Strength Very Weak Accuracy 100.0% Values Daily Returns

## Microsoft  vs.  ATT Inc

 Performance
 Timeline
 Microsoft Correlation Profile

### 14 of 100

 Low High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Microsoft may actually be approaching a critical reversion point that can send shares even higher in April 2024.
 Performance Backtest Predict
 ATT Inc Correlation Profile

### 2 of 100

 Low High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ATT is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.
 Performance Backtest Predict

## Microsoft and ATT Volatility Contrast

 Predicted Return Density
 Returns

## Pair Trading with Microsoft and ATT

The main advantage of trading using opposite Microsoft and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.
 Microsoft vs. Marqeta Microsoft vs. Veritone Microsoft vs. Block Inc Microsoft vs. Nextnav Acquisition Corp
The idea behind Microsoft and ATT Inc 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.
 ATT vs. Chester Mining ATT vs. Ioneer Ltd American ATT vs. US GoldMining Common ATT vs. Integrated Wellness Acquisition