Correlation Between Microsoft Corp and Apple

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

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

Diversification Opportunities for Microsoft Corp and Apple

0.19

Correlation Coefficient

Microsoft Corp  Apple

Average diversification

The 3 months correlation between Microsoft and Apple is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp CDR and Apple Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc CDR 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 CDR are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc CDR has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and Apple go up and down completely randomly.

Pair Corralation between Microsoft Corp and Apple

Assuming the 90 days trading horizon Microsoft Corp CDR is expected to generate 0.89 times more return on investment than Apple. However, Microsoft Corp CDR is 1.12 times less risky than Apple. It trades about 0.39 of its potential returns per unit of risk. Apple Inc CDR is currently generating about 0.09 per unit of risk. If you would invest  2,601  in Microsoft Corp CDR on April 21, 2025 and sell it today you would earn a total of  1,074  from holding Microsoft Corp CDR or generate 41.29% return on investment over 90 days.

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

Microsoft Corp CDR  vs.  Apple Inc CDR

Microsoft Corp CDR

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft Corp CDR are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Microsoft Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc CDR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Microsoft Corp and Apple

The main advantage of trading using opposite Microsoft Corp and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft Corp position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.

The idea behind Microsoft Corp CDR and Apple Inc CDR 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.