Correlation Between Microsoft Corp and Capstone Infrastructure

Can any of the company-specific risk be diversified away by investing in both Microsoft Corp and Capstone Infrastructure 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 Capstone Infrastructure 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 Capstone Infrastructure Corp, you can compare the effects of market volatilities on Microsoft Corp and Capstone Infrastructure 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 Capstone Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft Corp and Capstone Infrastructure.

Diversification Opportunities for Microsoft Corp and Capstone Infrastructure

0.68

Correlation Coefficient

Microsoft Corp  Capstone Infrastructure

Poor diversification

The 3 months correlation between Microsoft and Capstone is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp CDR and Capstone Infrastructure Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Infrastructure 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 Capstone Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Infrastructure has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and Capstone Infrastructure go up and down completely randomly.

Pair Corralation between Microsoft Corp and Capstone Infrastructure

Assuming the 90 days trading horizon Microsoft Corp CDR is expected to generate 1.0 times more return on investment than Capstone Infrastructure. However, Microsoft Corp CDR is 1.0 times less risky than Capstone Infrastructure. It trades about 0.38 of its potential returns per unit of risk. Capstone Infrastructure Corp is currently generating about 0.13 per unit of risk. If you would invest  2,658  in Microsoft Corp CDR on April 22, 2025 and sell it today you would earn a total of  1,017  from holding Microsoft Corp CDR or generate 38.26% return on investment over 90 days.

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

Microsoft Corp CDR  vs.  Capstone Infrastructure Corp

Microsoft Corp CDR

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft Corp CDR are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Microsoft Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Capstone Infrastructure

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Infrastructure Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Capstone Infrastructure may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Microsoft Corp and Capstone Infrastructure

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

The idea behind Microsoft Corp CDR and Capstone Infrastructure Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.