Correlation Between Micron Technology and AXA SA

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

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

Diversification Opportunities for Micron Technology and AXA SA

0.14

Correlation Coefficient

Micron Technology  AXA SA

Average diversification

The 3 months correlation between Micron and AXA is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA SA 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 AXA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA SA has no effect on the direction of Micron Technology i.e., Micron Technology and AXA SA go up and down completely randomly.

Pair Corralation between Micron Technology and AXA SA

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the AXA SA. In addition to that, Micron Technology is 3.08 times more volatile than AXA SA. It trades about -0.07 of its total potential returns per unit of risk. AXA SA is currently generating about -0.08 per unit of volatility. If you would invest  3,508  in AXA SA on September 23, 2024 and sell it today you would lose (157.00) from holding AXA SA or give up 4.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.73%
Values	Daily Returns

Micron Technology  vs.  AXA SA

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 comparatively stable basic indicators, Micron Technology is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

AXA SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXA SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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.

Pair Trading with Micron Technology and AXA SA

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

The idea behind Micron Technology and AXA SA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.