Correlation Between Microsoft and JLEN Environmental
Can any of the company-specific risk be diversified away by investing in both Microsoft and JLEN Environmental 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 JLEN Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and JLEN Environmental Assets, you can compare the effects of market volatilities on Microsoft and JLEN Environmental 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 JLEN Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and JLEN Environmental.
Diversification Opportunities for Microsoft and JLEN Environmental
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and JLEN is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and JLEN Environmental Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JLEN Environmental Assets 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 JLEN Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JLEN Environmental Assets has no effect on the direction of Microsoft i.e., Microsoft and JLEN Environmental go up and down completely randomly.
Pair Corralation between Microsoft and JLEN Environmental
Given the investment horizon of 90 days Microsoft is expected to generate 1.28 times more return on investment than JLEN Environmental. However, Microsoft is 1.28 times more volatile than JLEN Environmental Assets. It trades about -0.01 of its potential returns per unit of risk. JLEN Environmental Assets is currently generating about -0.29 per unit of risk. If you would invest 41,858 in Microsoft on November 3, 2024 and sell it today you would lose (352.00) from holding Microsoft or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Microsoft vs. JLEN Environmental Assets
Performance |
| Timeline |
| Microsoft |
| JLEN Environmental Assets |
Microsoft and JLEN Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and JLEN Environmental
The main advantage of trading using opposite Microsoft and JLEN Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, JLEN Environmental 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 JLEN Environmental will offset losses from the drop in JLEN Environmental's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| JLEN Environmental vs. InterContinental Hotels Group | JLEN Environmental vs. URU Metals | JLEN Environmental vs. Eastinco Mining Exploration | JLEN Environmental vs. Cornish Metals |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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