Correlation Between Beyond Meat and Microsoft

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

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

Diversification Opportunities for Beyond Meat and Microsoft

0.73

Correlation Coefficient

Beyond Meat  Microsoft

Poor diversification

The 3 months correlation between Beyond and Microsoft is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Meat and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Beyond Meat 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 Beyond Meat 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 Beyond Meat i.e., Beyond Meat and Microsoft go up and down completely randomly.

Pair Corralation between Beyond Meat and Microsoft

Assuming the 90 days trading horizon Beyond Meat is expected to generate 1.06 times less return on investment than Microsoft. In addition to that, Beyond Meat is 3.28 times more volatile than Microsoft. It trades about 0.11 of its total potential returns per unit of risk. Microsoft is currently generating about 0.4 per unit of volatility. If you would invest  8,719  in Microsoft on April 22, 2025 and sell it today you would earn a total of  3,156  from holding Microsoft or generate 36.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Beyond Meat  vs.  Microsoft

Beyond Meat

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Beyond Meat are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beyond Meat sustained solid returns over the last few months and may actually be approaching a breakup point.

Microsoft

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Microsoft sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beyond Meat and Microsoft

The main advantage of trading using opposite Beyond Meat and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beyond Meat 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.

The idea behind Beyond Meat and Microsoft 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.