Correlation Between Microsoft and Jowell Global

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

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

Diversification Opportunities for Microsoft and Jowell Global

0.32

Correlation Coefficient

Microsoft  Jowell Global

Weak diversification

The 3 months correlation between Microsoft and Jowell is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Jowell Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jowell Global 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 Jowell Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jowell Global has no effect on the direction of Microsoft i.e., Microsoft and Jowell Global go up and down completely randomly.

Pair Corralation between Microsoft and Jowell Global

Given the investment horizon of 90 days Microsoft is expected to generate 0.33 times more return on investment than Jowell Global. However, Microsoft is 3.05 times less risky than Jowell Global. It trades about -0.11 of its potential returns per unit of risk. Jowell Global is currently generating about -0.06 per unit of risk. If you would invest  42,398  in Microsoft on December 29, 2024 and sell it today you would lose (4,518) from holding Microsoft or give up 10.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Microsoft  vs.  Jowell Global

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.

Jowell Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jowell Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Microsoft and Jowell Global

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

The idea behind Microsoft and Jowell Global 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.