Correlation Between Microsoft and JPM USD
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By analyzing existing cross correlation between Microsoft and JPM USD Ultra Short, you can compare the effects of market volatilities on Microsoft and JPM USD 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 JPM USD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and JPM USD.
Diversification Opportunities for Microsoft and JPM USD
Good diversification
The 3 months correlation between Microsoft and JPM is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and JPM USD Ultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM USD Ultra 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 JPM USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM USD Ultra has no effect on the direction of Microsoft i.e., Microsoft and JPM USD go up and down completely randomly.
Pair Corralation between Microsoft and JPM USD
Given the investment horizon of 90 days Microsoft is expected to generate 2.03 times more return on investment than JPM USD. However, Microsoft is 2.03 times more volatile than JPM USD Ultra Short. It trades about 0.24 of its potential returns per unit of risk. JPM USD Ultra Short is currently generating about 0.34 per unit of risk. If you would invest 40,764 in Microsoft on September 3, 2024 and sell it today you would earn a total of 2,334 from holding Microsoft or generate 5.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Microsoft vs. JPM USD Ultra Short
Performance |
| Timeline |
| Microsoft |
| JPM USD Ultra |
Microsoft and JPM USD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and JPM USD
The main advantage of trading using opposite Microsoft and JPM USD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, JPM USD 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 JPM USD will offset losses from the drop in JPM USD'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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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