Correlation Between Microsoft and Jyske Bank
Can any of the company-specific risk be diversified away by investing in both Microsoft and Jyske Bank 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 Jyske Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Jyske Bank AS, you can compare the effects of market volatilities on Microsoft and Jyske Bank 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 Jyske Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Jyske Bank.
Diversification Opportunities for Microsoft and Jyske Bank
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microsoft and Jyske is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Jyske Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jyske Bank AS 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 Jyske Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jyske Bank AS has no effect on the direction of Microsoft i.e., Microsoft and Jyske Bank go up and down completely randomly.
Pair Corralation between Microsoft and Jyske Bank
Given the investment horizon of 90 days Microsoft is expected to under-perform the Jyske Bank. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.65 times less risky than Jyske Bank. The stock trades about -0.29 of its potential returns per unit of risk. The Jyske Bank AS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 56,266 in Jyske Bank AS on January 20, 2024 and sell it today you would earn a total of 734.00 from holding Jyske Bank AS or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Microsoft vs. Jyske Bank AS
Performance |
| Timeline |
| Microsoft |
| Jyske Bank AS |
Microsoft and Jyske Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Jyske Bank
The main advantage of trading using opposite Microsoft and Jyske Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Jyske Bank 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 Jyske Bank will offset losses from the drop in Jyske Bank's long position.| Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings | Microsoft vs. Cloudflare |
| Jyske Bank vs. Dataproces Group AS | Jyske Bank vs. Lollands Bank | Jyske Bank vs. Skjern Bank AS | Jyske Bank vs. Nordea Bank Abp |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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