Correlation Between Microsoft CDR and Keyera Corp

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

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

Diversification Opportunities for Microsoft CDR and Keyera Corp

-0.03

Correlation Coefficient

Microsoft CDR  Keyera Corp

Good diversification

The 3 months correlation between Microsoft and Keyera is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft CDR and Keyera Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyera Corp and Microsoft CDR 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 CDR are associated (or correlated) with Keyera Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyera Corp has no effect on the direction of Microsoft CDR i.e., Microsoft CDR and Keyera Corp go up and down completely randomly.

Pair Corralation between Microsoft CDR and Keyera Corp

Assuming the 90 days trading horizon Microsoft CDR is expected to generate 1.2 times more return on investment than Keyera Corp. However, Microsoft CDR is 1.2 times more volatile than Keyera Corp. It trades about -0.04 of its potential returns per unit of risk. Keyera Corp is currently generating about -0.3 per unit of risk. If you would invest  3,680  in Microsoft CDR on August 14, 2025 and sell it today you would lose (45.00) from holding Microsoft CDR or give up 1.22% of portfolio value over 90 days.

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

Microsoft CDR  vs.  Keyera Corp

Microsoft CDR

Risk-Adjusted Performance

Weakest

Over the last 90 days Microsoft CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Microsoft CDR is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Keyera Corp

Risk-Adjusted Performance

Weakest

Over the last 90 days Keyera Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Keyera Corp is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Microsoft CDR and Keyera Corp

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

The idea behind Microsoft CDR and Keyera 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.