Correlation Between Micron Technology and Beowulf Mining
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Beowulf Mining 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 Beowulf Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Beowulf Mining, you can compare the effects of market volatilities on Micron Technology and Beowulf Mining 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 Beowulf Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Beowulf Mining.
Diversification Opportunities for Micron Technology and Beowulf Mining
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Micron and Beowulf is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Beowulf Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beowulf Mining 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 Beowulf Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beowulf Mining has no effect on the direction of Micron Technology i.e., Micron Technology and Beowulf Mining go up and down completely randomly.
Pair Corralation between Micron Technology and Beowulf Mining
Assuming the 90 days trading horizon Micron Technology is expected to generate 0.96 times more return on investment than Beowulf Mining. However, Micron Technology is 1.04 times less risky than Beowulf Mining. It trades about 0.05 of its potential returns per unit of risk. Beowulf Mining is currently generating about -0.16 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 | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Micron Technology vs. Beowulf Mining
Performance |
| Timeline |
| Micron Technology |
| Beowulf Mining |
Micron Technology and Beowulf Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Beowulf Mining
The main advantage of trading using opposite Micron Technology and Beowulf Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Beowulf Mining 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 Beowulf Mining will offset losses from the drop in Beowulf Mining'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 |
| Beowulf Mining vs. Hilton Food Group | Beowulf Mining vs. Zegona Communications Plc | Beowulf Mining vs. Mobile Tornado Group | Beowulf Mining vs. JD Sports Fashion |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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