Correlation Between Microsoft and JLT MOBILE

Can any of the company-specific risk be diversified away by investing in both Microsoft and JLT MOBILE 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 JLT MOBILE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Microsoft and JLT MOBILE PUTER, you can compare the effects of market volatilities on Microsoft and JLT MOBILE 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 JLT MOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and JLT MOBILE.

Diversification Opportunities for Microsoft and JLT MOBILE

-0.87

Correlation Coefficient

Microsoft  JLT MOBILE

Pay attention - limited upside

The 3 months correlation between Microsoft and JLT is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and JLT MOBILE PUTER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JLT MOBILE PUTER 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 JLT MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JLT MOBILE PUTER has no effect on the direction of Microsoft i.e., Microsoft and JLT MOBILE go up and down completely randomly.

Pair Corralation between Microsoft and JLT MOBILE

Assuming the 90 days trading horizon Microsoft is expected to generate 0.5 times more return on investment than JLT MOBILE. However, Microsoft is 2.01 times less risky than JLT MOBILE. It trades about 0.1 of its potential returns per unit of risk. JLT MOBILE PUTER is currently generating about -0.05 per unit of risk. If you would invest  20,747  in Microsoft on September 29, 2024 and sell it today you would earn a total of  20,293  from holding Microsoft or generate 97.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Microsoft  vs.  JLT MOBILE PUTER

Microsoft

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Microsoft may actually be approaching a critical reversion point that can send shares even higher in January 2025.

JLT MOBILE PUTER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JLT MOBILE PUTER has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Microsoft and JLT MOBILE

The main advantage of trading using opposite Microsoft and JLT MOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, JLT MOBILE 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 JLT MOBILE will offset losses from the drop in JLT MOBILE's long position.

The idea behind Microsoft and JLT MOBILE PUTER pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.