Correlation Between Microsoft and Jpmorgan Preferred
Can any of the company-specific risk be diversified away by investing in both Microsoft and Jpmorgan Preferred 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 Jpmorgan Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Jpmorgan Preferred And, you can compare the effects of market volatilities on Microsoft and Jpmorgan Preferred 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 Jpmorgan Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Jpmorgan Preferred.
Diversification Opportunities for Microsoft and Jpmorgan Preferred
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Jpmorgan is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Jpmorgan Preferred And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Preferred And 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 Jpmorgan Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Preferred And has no effect on the direction of Microsoft i.e., Microsoft and Jpmorgan Preferred go up and down completely randomly.
Pair Corralation between Microsoft and Jpmorgan Preferred
Given the investment horizon of 90 days Microsoft is expected to generate 3.48 times more return on investment than Jpmorgan Preferred. However, Microsoft is 3.48 times more volatile than Jpmorgan Preferred And. It trades about 0.08 of its potential returns per unit of risk. Jpmorgan Preferred And is currently generating about 0.08 per unit of risk. If you would invest 24,601 in Microsoft on November 19, 2024 and sell it today you would earn a total of 16,242 from holding Microsoft or generate 66.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Microsoft vs. Jpmorgan Preferred And
Performance |
| Timeline |
| Microsoft |
| Jpmorgan Preferred And |
Microsoft and Jpmorgan Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Jpmorgan Preferred
The main advantage of trading using opposite Microsoft and Jpmorgan Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Jpmorgan Preferred 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 Jpmorgan Preferred will offset losses from the drop in Jpmorgan Preferred's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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