Correlation Between Microsoft and WM Technology
Can any of the company-specific risk be diversified away by investing in both Microsoft and WM Technology 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 WM Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and WM Technology, you can compare the effects of market volatilities on Microsoft and WM Technology 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 WM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and WM Technology.
Diversification Opportunities for Microsoft and WM Technology
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and MAPSW is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and WM Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WM Technology 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 WM Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WM Technology has no effect on the direction of Microsoft i.e., Microsoft and WM Technology go up and down completely randomly.
Pair Corralation between Microsoft and WM Technology
Given the investment horizon of 90 days Microsoft is expected to generate 25.71 times less return on investment than WM Technology. But when comparing it to its historical volatility, Microsoft is 18.98 times less risky than WM Technology. It trades about 0.13 of its potential returns per unit of risk. WM Technology is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1.23 in WM Technology on June 6, 2025 and sell it today you would earn a total of 1.91 from holding WM Technology or generate 155.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. WM Technology
Performance |
| Timeline |
| Microsoft |
| WM Technology |
Microsoft and WM Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and WM Technology
The main advantage of trading using opposite Microsoft and WM Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, WM Technology 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 WM Technology will offset losses from the drop in WM Technology'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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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