Correlation Between Apple and Microsoft

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

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

Diversification Opportunities for Apple and Microsoft

0.97
  Correlation Coefficient
Apple Inc
Microsoft

Almost no diversification

The 3 months correlation between Apple and Microsoft is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Microsoft Corp. in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Apple 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 Apple Inc 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 Apple i.e. Apple and Microsoft go up and down completely randomly.

Pair Corralation between Apple and Microsoft

Given the investment horizon of 30 days, Apple Inc is expected to generate 0.94 times more return on investment than Microsoft. However, Apple Inc is 1.06 times less risky than Microsoft. It trades about 0.31 of its potential returns per unit of risk. Microsoft is currently generating about 0.22 per unit of risk. If you would invest  27,325  in Apple Inc on June 12, 2020 and sell it today you would earn a total of  11,043  from holding Apple Inc or generate 40.41% return on investment over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Apple Inc  vs.  Microsoft Corp.

 Performance (%) 
      Timeline 
Apple Inc 
2121

Apple Risk-Adjusted Performance

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 21 (%) of all global equities and portfolios over the last 30 days. Even with considerably weak technical indicators, Apple revealed solid returns over the last few months and may actually be approaching a breakup point.
Microsoft 
1515

Microsoft Risk-Adjusted Performance

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 15 (%) of all global equities and portfolios over the last 30 days. In spite of comparatively weak essential indicators, Microsoft unveiled solid returns over the last few months and may actually be approaching a breakup point.

Apple and Microsoft Volatility Contrast

 Predicted Return Density 
      Returns 
Check out your portfolio center. Please also try Probability Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.


 
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