Correlation Between Micron Technology and CHRISTIAN DIOR

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

By analyzing existing cross correlation between Micron Technology and CHRISTIAN DIOR ADR14EO2, you can compare the effects of market volatilities on Micron Technology and CHRISTIAN DIOR 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 CHRISTIAN DIOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and CHRISTIAN DIOR.

Diversification Opportunities for Micron Technology and CHRISTIAN DIOR

-0.07

Correlation Coefficient

Micron Technology  CHRISTIAN DIOR

Good diversification

The 3 months correlation between Micron and CHRISTIAN is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and CHRISTIAN DIOR ADR14EO2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHRISTIAN DIOR ADR14EO2 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 CHRISTIAN DIOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHRISTIAN DIOR ADR14EO2 has no effect on the direction of Micron Technology i.e., Micron Technology and CHRISTIAN DIOR go up and down completely randomly.

Pair Corralation between Micron Technology and CHRISTIAN DIOR

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.98 times more return on investment than CHRISTIAN DIOR. However, Micron Technology is 1.98 times more volatile than CHRISTIAN DIOR ADR14EO2. It trades about 0.01 of its potential returns per unit of risk. CHRISTIAN DIOR ADR14EO2 is currently generating about -0.03 per unit of risk. If you would invest  8,661  in Micron Technology on October 2, 2024 and sell it today you would lose (245.00) from holding Micron Technology or give up 2.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.57%
Values	Daily Returns

Micron Technology  vs.  CHRISTIAN DIOR ADR14EO2

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.

CHRISTIAN DIOR ADR14EO2

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CHRISTIAN DIOR ADR14EO2 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CHRISTIAN DIOR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Micron Technology and CHRISTIAN DIOR

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

The idea behind Micron Technology and CHRISTIAN DIOR ADR14EO2 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.