Correlation Between Micron Technology and Fortune Brands
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Fortune Brands 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 Fortune Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Fortune Brands Home, you can compare the effects of market volatilities on Micron Technology and Fortune Brands 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 Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Fortune Brands.
Diversification Opportunities for Micron Technology and Fortune Brands
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Micron and Fortune is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home 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 Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Home has no effect on the direction of Micron Technology i.e., Micron Technology and Fortune Brands go up and down completely randomly.
Pair Corralation between Micron Technology and Fortune Brands
Assuming the 90 days trading horizon Micron Technology is expected to generate 2.38 times more return on investment than Fortune Brands. However, Micron Technology is 2.38 times more volatile than Fortune Brands Home. It trades about 0.27 of its potential returns per unit of risk. Fortune Brands Home is currently generating about 0.25 per unit of risk. If you would invest 8,916 in Micron Technology on October 25, 2024 and sell it today you would earn a total of 1,985 from holding Micron Technology or generate 22.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 68.42% |
| Values | Daily Returns |
Micron Technology vs. Fortune Brands Home
Performance |
| Timeline |
| Micron Technology |
| Fortune Brands Home |
Micron Technology and Fortune Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Fortune Brands
The main advantage of trading using opposite Micron Technology and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Fortune Brands 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 Fortune Brands will offset losses from the drop in Fortune Brands' long position.| Micron Technology vs. Bloomsbury Publishing Plc | Micron Technology vs. Livermore Investments Group | Micron Technology vs. BE Semiconductor Industries | Micron Technology vs. Aberdeen Diversified Income |
| Fortune Brands vs. Raytheon Technologies Corp | Fortune Brands vs. Morgan Advanced Materials | Fortune Brands vs. Playtech Plc | Fortune Brands vs. Micron Technology |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |