Correlation Between Micron Technology and International Equity
Can any of the company-specific risk be diversified away by investing in both Micron Technology and International Equity 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 International Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and International Equity Portfolio, you can compare the effects of market volatilities on Micron Technology and International Equity 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 International Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and International Equity.
Diversification Opportunities for Micron Technology and International Equity
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Micron and International is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and International Equity Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Equity 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 International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of Micron Technology i.e., Micron Technology and International Equity go up and down completely randomly.
Pair Corralation between Micron Technology and International Equity
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 0.73 times more return on investment than International Equity. However, Micron Technology is 1.37 times less risky than International Equity. It trades about -0.13 of its potential returns per unit of risk. International Equity Portfolio is currently generating about -0.22 per unit of risk. If you would invest 10,448 in Micron Technology on September 24, 2024 and sell it today you would lose (1,476) from holding Micron Technology or give up 14.13% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Micron Technology vs. International Equity Portfolio
Performance |
Timeline |
Micron Technology |
International Equity |
Micron Technology and International Equity Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Micron Technology and International Equity
The main advantage of trading using opposite Micron Technology and International Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, International Equity 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 International Equity will offset losses from the drop in International Equity's long position.Micron Technology vs. Diodes Incorporated | Micron Technology vs. Daqo New Energy | Micron Technology vs. Nano Labs | Micron Technology vs. Impinj Inc |
International Equity vs. Emerging Markets Equity | International Equity vs. Global Fixed Income | International Equity vs. Global Fixed Income | International Equity vs. Global Fixed Income |
Check out your portfolio center.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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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