Correlation Between Microsoft and Investec Emerging
Can any of the company-specific risk be diversified away by investing in both Microsoft and Investec Emerging 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 Investec Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Investec Emerging Markets, you can compare the effects of market volatilities on Microsoft and Investec Emerging 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 Investec Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Investec Emerging.
Diversification Opportunities for Microsoft and Investec Emerging
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Microsoft and Investec is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Investec Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec Emerging Markets 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 Investec Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Emerging Markets has no effect on the direction of Microsoft i.e., Microsoft and Investec Emerging go up and down completely randomly.
Pair Corralation between Microsoft and Investec Emerging
Given the investment horizon of 90 days Microsoft is expected to generate 1.25 times more return on investment than Investec Emerging. However, Microsoft is 1.25 times more volatile than Investec Emerging Markets. It trades about 0.17 of its potential returns per unit of risk. Investec Emerging Markets is currently generating about 0.2 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. Investec Emerging Markets
Performance |
| Timeline |
| Microsoft |
| Investec Emerging Markets |
Microsoft and Investec Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Investec Emerging
The main advantage of trading using opposite Microsoft and Investec Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Investec Emerging 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 Investec Emerging will offset losses from the drop in Investec Emerging's long position.| Microsoft vs. Palantir Technologies Class | Microsoft vs. Crowdstrike Holdings | Microsoft vs. Oracle | Microsoft vs. CoreWeave, Class A |
| Investec Emerging vs. Vanguard Emerging Markets | Investec Emerging vs. Vanguard Emerging Markets | Investec Emerging vs. Vanguard Emerging Markets | Investec Emerging vs. Vanguard Emerging Markets |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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