Correlation Between Micron Technology and American Mutual

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

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

Diversification Opportunities for Micron Technology and American Mutual

0.49

Correlation Coefficient

Micron Technology  American Mutual

Very weak diversification

The 3 months correlation between Micron and American is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual 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 American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual has no effect on the direction of Micron Technology i.e., Micron Technology and American Mutual go up and down completely randomly.

Pair Corralation between Micron Technology and American Mutual

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the American Mutual. In addition to that, Micron Technology is 3.61 times more volatile than American Mutual Fund. It trades about -0.14 of its total potential returns per unit of risk. American Mutual Fund is currently generating about -0.3 per unit of volatility. If you would invest  6,006  in American Mutual Fund on September 25, 2024 and sell it today you would lose (468.00) from holding American Mutual Fund or give up 7.79% of portfolio value over 90 days.

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

Micron Technology  vs.  American Mutual Fund

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.

American Mutual

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Mutual Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, American Mutual 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 American Mutual

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

The idea behind Micron Technology and American Mutual Fund 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.