Correlation Between Micron Technology and CAC All

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Can any of the company-specific risk be diversified away by investing in both Micron Technology and CAC All 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 CAC All into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and CAC All Shares, you can compare the effects of market volatilities on Micron Technology and CAC All 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 CAC All. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and CAC All.

Diversification Opportunities for Micron Technology and CAC All

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between Micron and CAC is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and CAC All Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAC All Shares 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 CAC All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAC All Shares has no effect on the direction of Micron Technology i.e., Micron Technology and CAC All go up and down completely randomly.
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Pair Corralation between Micron Technology and CAC All

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 4.07 times more return on investment than CAC All. However, Micron Technology is 4.07 times more volatile than CAC All Shares. It trades about 0.19 of its potential returns per unit of risk. CAC All Shares is currently generating about 0.14 per unit of risk. If you would invest  9,751  in Micron Technology on September 17, 2024 and sell it today you would earn a total of  1,075  from holding Micron Technology or generate 11.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Micron Technology  vs.  CAC All Shares

 Performance 
       Timeline  

Micron Technology and CAC All Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Micron Technology and CAC All

The main advantage of trading using opposite Micron Technology and CAC All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, CAC All 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 CAC All will offset losses from the drop in CAC All's long position.
The idea behind Micron Technology and CAC All Shares 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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