Correlation Between Micron Technology and POET Technologies
Can any of the company-specific risk be diversified away by investing in both Micron Technology and POET Technologies 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 POET Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and POET Technologies, you can compare the effects of market volatilities on Micron Technology and POET Technologies 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 POET Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and POET Technologies.
Diversification Opportunities for Micron Technology and POET Technologies
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Micron and POET is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and POET Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POET Technologies 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 POET Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POET Technologies has no effect on the direction of Micron Technology i.e., Micron Technology and POET Technologies go up and down completely randomly.
Pair Corralation between Micron Technology and POET Technologies
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 2.1 times less return on investment than POET Technologies. But when comparing it to its historical volatility, Micron Technology is 2.57 times less risky than POET Technologies. It trades about 0.06 of its potential returns per unit of risk. POET Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 308.00 in POET Technologies on September 23, 2024 and sell it today you would earn a total of 168.00 from holding POET Technologies or generate 54.55% 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. POET Technologies
Performance |
Timeline |
Micron Technology |
POET Technologies |
Micron Technology and POET Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Micron Technology and POET Technologies
The main advantage of trading using opposite Micron Technology and POET Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, POET Technologies 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 POET Technologies will offset losses from the drop in POET Technologies' long position.Micron Technology vs. Diodes Incorporated | Micron Technology vs. Daqo New Energy | Micron Technology vs. MagnaChip Semiconductor | Micron Technology vs. Nano Labs |
POET Technologies vs. Diodes Incorporated | POET Technologies vs. Daqo New Energy | POET Technologies vs. MagnaChip Semiconductor | POET Technologies vs. Nano Labs |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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