Correlation Between Micron Technology and Dolly Varden

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

By analyzing existing cross correlation between Micron Technology and Dolly Varden Silver, you can compare the effects of market volatilities on Micron Technology and Dolly Varden 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 Dolly Varden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Dolly Varden.

Diversification Opportunities for Micron Technology and Dolly Varden

-0.16

Correlation Coefficient

Micron Technology  Dolly Varden

Good diversification

The 3 months correlation between Micron and Dolly is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Dolly Varden Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolly Varden Silver 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 Dolly Varden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolly Varden Silver has no effect on the direction of Micron Technology i.e., Micron Technology and Dolly Varden go up and down completely randomly.

Pair Corralation between Micron Technology and Dolly Varden

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.65 times less return on investment than Dolly Varden. But when comparing it to its historical volatility, Micron Technology is 1.93 times less risky than Dolly Varden. It trades about 0.05 of its potential returns per unit of risk. Dolly Varden Silver is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  91.00  in Dolly Varden Silver on December 4, 2024 and sell it today you would earn a total of  12.00  from holding Dolly Varden Silver or generate 13.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	31.78%
Values	Daily Returns

Micron Technology  vs.  Dolly Varden Silver

Micron Technology

Risk-Adjusted Performance

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.

Dolly Varden Silver

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dolly Varden Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Dolly Varden is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Micron Technology and Dolly Varden

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

The idea behind Micron Technology and Dolly Varden Silver 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.