Correlation Between Micron Technology and Nordea 1

Can any of the company-specific risk be diversified away by investing in both Micron Technology and Nordea 1 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 Micron Technology and Nordea 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Micron Technology and Nordea 1 , you can compare the effects of market volatilities on Micron Technology and Nordea 1 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 Micron Technology with a short position of Nordea 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Nordea 1.

Diversification Opportunities for Micron Technology and Nordea 1

-0.24

Correlation Coefficient

Micron Technology  Nordea 1

Very good diversification

The 3 months correlation between Micron and Nordea is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Nordea 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordea 1 and Micron Technology 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 Micron Technology are associated (or correlated) with Nordea 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordea 1 has no effect on the direction of Micron Technology i.e., Micron Technology and Nordea 1 go up and down completely randomly.

Pair Corralation between Micron Technology and Nordea 1

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Nordea 1. In addition to that, Micron Technology is 4.18 times more volatile than Nordea 1 . It trades about -0.06 of its total potential returns per unit of risk. Nordea 1 is currently generating about 0.07 per unit of volatility. If you would invest  37,494  in Nordea 1 on October 7, 2024 and sell it today you would earn a total of  2,610  from holding Nordea 1 or generate 6.96% return on investment over 90 days.

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

Micron Technology  vs.  Nordea 1

Micron Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nordea 1

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nordea 1 are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nordea 1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Micron Technology and Nordea 1

The main advantage of trading using opposite Micron Technology and Nordea 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Nordea 1 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 Nordea 1 will offset losses from the drop in Nordea 1's long position.

The idea behind Micron Technology and Nordea 1 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.