Correlation Between Zayo Group and Microsoft

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

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

Diversification Opportunities for Zayo Group and Microsoft

0.0

Correlation Coefficient

Zayo Group  Microsoft

Pay attention - limited upside

The 3 months correlation between Zayo and Microsoft is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Zayo Group Holdings and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Zayo Group 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 Zayo Group Holdings are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Zayo Group i.e., Zayo Group and Microsoft go up and down completely randomly.

Pair Corralation between Zayo Group and Microsoft

If you would invest (100.00) in Zayo Group Holdings on February 3, 2024 and sell it today you would earn a total of  100.00  from holding Zayo Group Holdings or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Zayo Group Holdings  vs.  Microsoft

Zayo Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zayo Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Zayo Group is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Microsoft

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Zayo Group and Microsoft

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

The idea behind Zayo Group Holdings and Microsoft 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.