Correlation Between Microsoft and JCK International
Can any of the company-specific risk be diversified away by investing in both Microsoft and JCK International 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 JCK International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and JCK International Public, you can compare the effects of market volatilities on Microsoft and JCK International 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 JCK International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and JCK International.
Diversification Opportunities for Microsoft and JCK International
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and JCK is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and JCK International Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCK International Public 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 JCK International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCK International Public has no effect on the direction of Microsoft i.e., Microsoft and JCK International go up and down completely randomly.
Pair Corralation between Microsoft and JCK International
Given the investment horizon of 90 days Microsoft is expected to generate 220.88 times less return on investment than JCK International. But when comparing it to its historical volatility, Microsoft is 67.85 times less risky than JCK International. It trades about 0.02 of its potential returns per unit of risk. JCK International Public is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 35.00 in JCK International Public on September 3, 2024 and sell it today you would lose (11.00) from holding JCK International Public or give up 31.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.95% |
| Values | Daily Returns |
Microsoft vs. JCK International Public
Performance |
| Timeline |
| Microsoft |
| JCK International Public |
Microsoft and JCK International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and JCK International
The main advantage of trading using opposite Microsoft and JCK International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, JCK International 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 JCK International will offset losses from the drop in JCK International'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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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