Correlation Between Microsoft and Cavanal Hill

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

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

Diversification Opportunities for Microsoft and Cavanal Hill

-0.54

Correlation Coefficient

Microsoft  Cavanal Hill

Excellent diversification

The 3 months correlation between Microsoft and Cavanal is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Cavanal Hill Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cavanal Hill Ultra and Microsoft 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 are associated (or correlated) with Cavanal Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cavanal Hill Ultra has no effect on the direction of Microsoft i.e., Microsoft and Cavanal Hill go up and down completely randomly.

Pair Corralation between Microsoft and Cavanal Hill

Given the investment horizon of 90 days Microsoft is expected to under-perform the Cavanal Hill. In addition to that, Microsoft is 19.8 times more volatile than Cavanal Hill Ultra. It trades about -0.03 of its total potential returns per unit of risk. Cavanal Hill Ultra is currently generating about 0.16 per unit of volatility. If you would invest  993.00  in Cavanal Hill Ultra on September 9, 2025 and sell it today you would earn a total of  6.00  from holding Cavanal Hill Ultra or generate 0.6% return on investment over 90 days.

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

Microsoft  vs.  Cavanal Hill Ultra

Microsoft

Risk-Adjusted Performance

Weakest

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Cavanal Hill Ultra

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cavanal Hill Ultra are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Cavanal Hill is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Microsoft and Cavanal Hill

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

The idea behind Microsoft and Cavanal Hill Ultra 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.

Check out your portfolio center.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..