Correlation Between Plaza Retail and Microsoft Corp

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

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

Diversification Opportunities for Plaza Retail and Microsoft Corp

0.91

Correlation Coefficient

Plaza Retail  Microsoft Corp

Almost no diversification

The 3 months correlation between Plaza and Microsoft is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Plaza Retail REIT and Microsoft Corp CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft Corp CDR and Plaza Retail 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 Plaza Retail REIT are associated (or correlated) with Microsoft Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft Corp CDR has no effect on the direction of Plaza Retail i.e., Plaza Retail and Microsoft Corp go up and down completely randomly.

Pair Corralation between Plaza Retail and Microsoft Corp

Assuming the 90 days trading horizon Plaza Retail is expected to generate 2.46 times less return on investment than Microsoft Corp. But when comparing it to its historical volatility, Plaza Retail REIT is 2.13 times less risky than Microsoft Corp. It trades about 0.27 of its potential returns per unit of risk. Microsoft Corp CDR is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  2,835  in Microsoft Corp CDR on April 25, 2025 and sell it today you would earn a total of  808.00  from holding Microsoft Corp CDR or generate 28.5% return on investment over 90 days.

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

Plaza Retail REIT  vs.  Microsoft Corp CDR

Plaza Retail REIT

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Plaza Retail REIT are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Plaza Retail may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Microsoft Corp CDR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft Corp CDR are ranked lower than 24 (%) 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.

Pair Trading with Plaza Retail and Microsoft Corp

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

The idea behind Plaza Retail REIT and Microsoft Corp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.