Correlation Between Micron Technology and Oakmark Fund

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

By analyzing existing cross correlation between Micron Technology and Oakmark Fund R6, you can compare the effects of market volatilities on Micron Technology and Oakmark Fund 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 Oakmark Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Oakmark Fund.

Diversification Opportunities for Micron Technology and Oakmark Fund

0.3

Correlation Coefficient

Micron Technology  Oakmark Fund

Weak diversification

The 3 months correlation between Micron and Oakmark is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Oakmark Fund R6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark Fund R6 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 Oakmark Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark Fund R6 has no effect on the direction of Micron Technology i.e., Micron Technology and Oakmark Fund go up and down completely randomly.

Pair Corralation between Micron Technology and Oakmark Fund

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.15 times less return on investment than Oakmark Fund. In addition to that, Micron Technology is 4.36 times more volatile than Oakmark Fund R6. It trades about 0.01 of its total potential returns per unit of risk. Oakmark Fund R6 is currently generating about 0.07 per unit of volatility. If you would invest  13,811  in Oakmark Fund R6 on December 4, 2024 and sell it today you would earn a total of  1,844  from holding Oakmark Fund R6 or generate 13.35% return on investment over 90 days.

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

Micron Technology  vs.  Oakmark Fund R6

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 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.

Oakmark Fund R6

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oakmark Fund R6 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Oakmark Fund 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 Oakmark Fund

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

The idea behind Micron Technology and Oakmark Fund R6 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.