Correlation Between Microsoft Corp and JP Morgan

By analyzing existing cross correlation between Microsoft Corp and JP Morgan Chase, you can compare the effects of market volatilities on Microsoft Corp and JP Morgan 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 Corp with a short position of JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft Corp and JP Morgan.

Specify exactly 2 symbols:

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

Diversification Opportunities for Microsoft Corp and JP Morgan

0.36
  Correlation Coefficient
Microsoft Corp
JP Morgan Chase

Weak diversification

The 3 months correlation between Microsoft and JP Morgan is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp and JP Morgan Chase in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Chase and Microsoft Corp 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 Corp are associated (or correlated) with JP Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Chase has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and JP Morgan go up and down completely randomly.

Pair Corralation between Microsoft Corp and JP Morgan

Given the investment horizon of 90 days Microsoft Corp is expected to generate 1.6 times less return on investment than JP Morgan. But when comparing it to its historical volatility, Microsoft Corp is 1.15 times less risky than JP Morgan. It trades about 0.11 of its potential returns per unit of risk. JP Morgan Chase is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  15,170  in JP Morgan Chase on July 28, 2021 and sell it today you would earn a total of  1,924  from holding JP Morgan Chase or generate 12.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Microsoft Corp  vs.  JP Morgan Chase

 Performance (%) 
      Timeline 
Microsoft Corp 
 Microsoft Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Microsoft Corp may actually be approaching a critical reversion point that can send shares even higher in November 2021.

Microsoft Price Channel

JP Morgan Chase 
 JP Morgan Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in JP Morgan Chase are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish basic indicators, JP Morgan may actually be approaching a critical reversion point that can send shares even higher in November 2021.

JP Morgan Price Channel

Microsoft Corp and JP Morgan Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Microsoft Corp and JP Morgan

The main advantage of trading using opposite Microsoft Corp and JP Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft Corp position performs unexpectedly, JP Morgan 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 JP Morgan will offset losses from the drop in JP Morgan's long position.
The idea behind Microsoft Corp and JP Morgan Chase 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.
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

Other Complementary Tools

Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go
CEO Directory
Screen CEOs from public companies around the world
Go
Shere Portfolio
Track or share privately all of your investments from the convenience of any device
Go
Fundamental Analysis
View fundamental data based on most recent published financial statements
Go
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go