Correlation Between Micron Technology and Fidelity Low

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

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

Diversification Opportunities for Micron Technology and Fidelity Low

-0.04

Correlation Coefficient

Micron Technology  Fidelity Low

Good diversification

The 3 months correlation between Micron and Fidelity is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Fidelity Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Low Duration 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 Fidelity Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Low Duration has no effect on the direction of Micron Technology i.e., Micron Technology and Fidelity Low go up and down completely randomly.

Pair Corralation between Micron Technology and Fidelity Low

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 99.75 times more return on investment than Fidelity Low. However, Micron Technology is 99.75 times more volatile than Fidelity Low Duration. It trades about 0.04 of its potential returns per unit of risk. Fidelity Low Duration is currently generating about 0.32 per unit of risk. If you would invest  8,992  in Micron Technology on December 5, 2024 and sell it today you would earn a total of  128.00  from holding Micron Technology or generate 1.42% 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.  Fidelity Low Duration

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

Fidelity Low Duration

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Low Duration are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Fidelity Low 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 Fidelity Low

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

The idea behind Micron Technology and Fidelity Low Duration 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.