Correlation Between Microsoft and BB Seguridade

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

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

Diversification Opportunities for Microsoft and BB Seguridade

-0.89

Correlation Coefficient

Microsoft  BB Seguridade

Pay attention - limited upside

The 3 months correlation between Microsoft and BBSE3 is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and BB Seguridade Participacoes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BB Seguridade Partic 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 BB Seguridade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BB Seguridade Partic has no effect on the direction of Microsoft i.e., Microsoft and BB Seguridade go up and down completely randomly.

Pair Corralation between Microsoft and BB Seguridade

Assuming the 90 days trading horizon Microsoft is expected to generate 0.91 times more return on investment than BB Seguridade. However, Microsoft is 1.1 times less risky than BB Seguridade. It trades about 0.38 of its potential returns per unit of risk. BB Seguridade Participacoes is currently generating about -0.2 per unit of risk. If you would invest  8,866  in Microsoft on April 23, 2025 and sell it today you would earn a total of  3,009  from holding Microsoft or generate 33.94% return on investment over 90 days.

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

Microsoft  vs.  BB Seguridade Participacoes

Microsoft

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 29 (%) 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.

BB Seguridade Partic

Risk-Adjusted Performance

Very Weak

Over the last 90 days BB Seguridade Participacoes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Microsoft and BB Seguridade

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

The idea behind Microsoft and BB Seguridade Participacoes 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.