Correlation Between Microsoft and Guidepath(r) Growth
Can any of the company-specific risk be diversified away by investing in both Microsoft and Guidepath(r) Growth 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 Guidepath(r) Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Guidepath Growth Allocation, you can compare the effects of market volatilities on Microsoft and Guidepath(r) Growth 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 Guidepath(r) Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Guidepath(r) Growth.
Diversification Opportunities for Microsoft and Guidepath(r) Growth
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Microsoft and Guidepath(r) is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Guidepath Growth Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Growth All 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 Guidepath(r) Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath Growth All has no effect on the direction of Microsoft i.e., Microsoft and Guidepath(r) Growth go up and down completely randomly.
Pair Corralation between Microsoft and Guidepath(r) Growth
Given the investment horizon of 90 days Microsoft is expected to generate 1.49 times more return on investment than Guidepath(r) Growth. However, Microsoft is 1.49 times more volatile than Guidepath Growth Allocation. It trades about 0.17 of its potential returns per unit of risk. Guidepath Growth Allocation is currently generating about 0.23 per unit of risk. If you would invest 45,993 in Microsoft on May 26, 2025 and sell it today you would earn a total of 4,730 from holding Microsoft or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Guidepath Growth Allocation
Performance |
| Timeline |
| Microsoft |
| Guidepath Growth All |
Microsoft and Guidepath(r) Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Guidepath(r) Growth
The main advantage of trading using opposite Microsoft and Guidepath(r) Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Guidepath(r) Growth 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 Guidepath(r) Growth will offset losses from the drop in Guidepath(r) Growth's long position.| Microsoft vs. Palantir Technologies Class | Microsoft vs. Crowdstrike Holdings | Microsoft vs. Oracle | Microsoft vs. CoreWeave, Class A |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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