Correlation Between Microsoft Corp and Jamieson Wellness
Can any of the company-specific risk be diversified away by investing in both Microsoft Corp and Jamieson Wellness 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 Corp and Jamieson Wellness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft Corp CDR and Jamieson Wellness, you can compare the effects of market volatilities on Microsoft Corp and Jamieson Wellness 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 Corp with a short position of Jamieson Wellness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft Corp and Jamieson Wellness.
Diversification Opportunities for Microsoft Corp and Jamieson Wellness
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microsoft and Jamieson is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp CDR and Jamieson Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jamieson Wellness and Microsoft Corp 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 Corp CDR are associated (or correlated) with Jamieson Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jamieson Wellness has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and Jamieson Wellness go up and down completely randomly.
Pair Corralation between Microsoft Corp and Jamieson Wellness
Assuming the 90 days trading horizon Microsoft Corp CDR is expected to generate 0.9 times more return on investment than Jamieson Wellness. However, Microsoft Corp CDR is 1.11 times less risky than Jamieson Wellness. It trades about -0.07 of its potential returns per unit of risk. Jamieson Wellness is currently generating about -0.33 per unit of risk. If you would invest 3,178 in Microsoft Corp CDR on October 24, 2024 and sell it today you would lose (52.00) from holding Microsoft Corp CDR or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft Corp CDR vs. Jamieson Wellness
Performance |
| Timeline |
| Microsoft Corp CDR |
| Jamieson Wellness |
Microsoft Corp and Jamieson Wellness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft Corp and Jamieson Wellness
The main advantage of trading using opposite Microsoft Corp and Jamieson Wellness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft Corp position performs unexpectedly, Jamieson Wellness 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 Jamieson Wellness will offset losses from the drop in Jamieson Wellness' long position.| Microsoft Corp vs. Calian Technologies | Microsoft Corp vs. Exco Technologies Limited | Microsoft Corp vs. Bausch Health Companies | Microsoft Corp vs. CVS HEALTH CDR |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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