Correlation Between Micron Technology and Givaudan
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Givaudan 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 Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Givaudan SA, you can compare the effects of market volatilities on Micron Technology and Givaudan 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 Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Givaudan.
Diversification Opportunities for Micron Technology and Givaudan
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Micron and Givaudan is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA 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 Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA has no effect on the direction of Micron Technology i.e., Micron Technology and Givaudan go up and down completely randomly.
Pair Corralation between Micron Technology and Givaudan
Assuming the 90 days trading horizon Micron Technology is expected to generate 5.96 times more return on investment than Givaudan. However, Micron Technology is 5.96 times more volatile than Givaudan SA. It trades about 0.05 of its potential returns per unit of risk. Givaudan SA is currently generating about -0.03 per unit of risk. If you would invest 9,802 in Micron Technology on October 11, 2024 and sell it today you would earn a total of 238.00 from holding Micron Technology or generate 2.43% 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. Givaudan SA
Performance |
| Timeline |
| Micron Technology |
| Givaudan SA |
Micron Technology and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Givaudan
The main advantage of trading using opposite Micron Technology and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Givaudan 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 Givaudan will offset losses from the drop in Givaudan's long position.| Micron Technology vs. Smarttech247 Group PLC | Micron Technology vs. Liontrust Asset Management | Micron Technology vs. Global Net Lease | Micron Technology vs. British American Tobacco |
| Givaudan vs. International Biotechnology Trust | Givaudan vs. Liontrust Asset Management | Givaudan vs. Cognizant Technology Solutions | Givaudan 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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