3 ms·

Can someone explain why Microsoft has overall the strongest negative correlation with Activision/Blizzard(-0.87) on a 1 year basis. That must be related to the

• GraemeMeyer 4y ago
  If the stocks fairly reliably went in opposite directions simultaneously I think that would cause it??
• sicromoft 4y ago
  This is standard for all acquisitions. - The acquiring company's share price drops because it often pays a premium for the target company, or incurs debt to finance the acquisition. - The target company's short-term share price tends to rise because the shareholders only agree to the deal if the purchase price exceeds their company's current value. See https://www.investopedia.com/ask/answers/203.asp https://www.investopedia.com/ask/answers/203.asp
• drinkzima 4y ago
  Maybe single day move on acquisition announcement - ATVI up quite a bit on 1/18, MSFT down that day. As an aside, the methodology says "We calculate the correlations between 2 securities on the daily closing values of the last 20 years. If one of the two securities has not been on the market for so long, we use all available prices to calculate the correlation." - hopefully the author means daily changes, not daily values, because otherwise everything is spurious.
  • drinkzima 4y ago
    More here: https://quantdare.com/correlation-prices-returns/ https://quantdare.com/correlation-prices-returns/