Correlation Between Rheinmetall and Micron Technology
Can any of the company-specific risk be diversified away by investing in both Rheinmetall and Micron Technology 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 Rheinmetall and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG and Micron Technology, you can compare the effects of market volatilities on Rheinmetall and Micron Technology 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 Rheinmetall with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and Micron Technology.
Diversification Opportunities for Rheinmetall and Micron Technology
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rheinmetall and Micron is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and Rheinmetall 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 Rheinmetall AG are associated (or correlated) with Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of Rheinmetall i.e., Rheinmetall and Micron Technology go up and down completely randomly.
Pair Corralation between Rheinmetall and Micron Technology
Assuming the 90 days trading horizon Rheinmetall AG is expected to generate 0.54 times more return on investment than Micron Technology. However, Rheinmetall AG is 1.84 times less risky than Micron Technology. It trades about 0.15 of its potential returns per unit of risk. Micron Technology is currently generating about 0.02 per unit of risk. If you would invest 49,600 in Rheinmetall AG on October 25, 2024 and sell it today you would earn a total of 22,420 from holding Rheinmetall AG or generate 45.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rheinmetall AG vs. Micron Technology
Performance |
| Timeline |
| Rheinmetall AG |
| Micron Technology |
Rheinmetall and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and Micron Technology
The main advantage of trading using opposite Rheinmetall and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall position performs unexpectedly, Micron Technology 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 Micron Technology will offset losses from the drop in Micron Technology's long position.| Rheinmetall vs. United Airlines Holdings | Rheinmetall vs. International Consolidated Airlines | Rheinmetall vs. Pets at Home | Rheinmetall vs. Eastman Chemical Co |
| Micron Technology vs. Bloomsbury Publishing Plc | Micron Technology vs. Livermore Investments Group | Micron Technology vs. BE Semiconductor Industries | Micron Technology vs. Aberdeen Diversified 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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |