Correlation Between Microsoft and Jacquet Metal
Can any of the company-specific risk be diversified away by investing in both Microsoft and Jacquet Metal 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 Jacquet Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Jacquet Metal Service, you can compare the effects of market volatilities on Microsoft and Jacquet Metal 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 Jacquet Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Jacquet Metal.
Diversification Opportunities for Microsoft and Jacquet Metal
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Jacquet is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service 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 Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of Microsoft i.e., Microsoft and Jacquet Metal go up and down completely randomly.
Pair Corralation between Microsoft and Jacquet Metal
Given the investment horizon of 90 days Microsoft is expected to generate 0.83 times more return on investment than Jacquet Metal. However, Microsoft is 1.2 times less risky than Jacquet Metal. It trades about 0.1 of its potential returns per unit of risk. Jacquet Metal Service is currently generating about 0.0 per unit of risk. If you would invest 22,345 in Microsoft on August 31, 2024 and sell it today you would earn a total of 20,001 from holding Microsoft or generate 89.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.56% |
| Values | Daily Returns |
Microsoft vs. Jacquet Metal Service
Performance |
| Timeline |
| Microsoft |
| Jacquet Metal Service |
Microsoft and Jacquet Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Jacquet Metal
The main advantage of trading using opposite Microsoft and Jacquet Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Jacquet Metal 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 Jacquet Metal will offset losses from the drop in Jacquet Metal's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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