Correlation Between Microsoft and JPMorgan Ultra

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

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

Diversification Opportunities for Microsoft and JPMorgan Ultra

-0.83

Correlation Coefficient

Microsoft  JPMorgan Ultra

Pay attention - limited upside

The 3 months correlation between Microsoft and JPMorgan is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and JPMorgan Ultra Short Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Ultra Short 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 Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Ultra Short has no effect on the direction of Microsoft i.e., Microsoft and JPMorgan Ultra go up and down completely randomly.

Pair Corralation between Microsoft and JPMorgan Ultra

Given the investment horizon of 90 days Microsoft is expected to under-perform the JPMorgan Ultra. In addition to that, Microsoft is 37.22 times more volatile than JPMorgan Ultra Short Municipal. It trades about -0.11 of its total potential returns per unit of risk. JPMorgan Ultra Short Municipal is currently generating about 0.28 per unit of volatility. If you would invest  5,045  in JPMorgan Ultra Short Municipal on December 30, 2024 and sell it today you would earn a total of  37.00  from holding JPMorgan Ultra Short Municipal or generate 0.73% return on investment over 90 days.

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

Microsoft  vs.  JPMorgan Ultra Short Municipal

Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

JPMorgan Ultra Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Ultra Short Municipal are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, JPMorgan Ultra is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Microsoft and JPMorgan Ultra

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

The idea behind Microsoft and JPMorgan Ultra Short Municipal 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.