Correlation Between Micron Technology and Capital Metals
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Capital Metals 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 Capital Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Capital Metals PLC, you can compare the effects of market volatilities on Micron Technology and Capital Metals 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 Capital Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Capital Metals.
Diversification Opportunities for Micron Technology and Capital Metals
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Micron and Capital is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Capital Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Metals PLC 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 Capital Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Metals PLC has no effect on the direction of Micron Technology i.e., Micron Technology and Capital Metals go up and down completely randomly.
Pair Corralation between Micron Technology and Capital Metals
Assuming the 90 days trading horizon Micron Technology is expected to under-perform the Capital Metals. In addition to that, Micron Technology is 1.05 times more volatile than Capital Metals PLC. It trades about -0.05 of its total potential returns per unit of risk. Capital Metals PLC is currently generating about 0.01 per unit of volatility. If you would invest 170.00 in Capital Metals PLC on November 7, 2024 and sell it today you would lose (5.00) from holding Capital Metals PLC or give up 2.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micron Technology vs. Capital Metals PLC
Performance |
| Timeline |
| Micron Technology |
| Capital Metals PLC |
Micron Technology and Capital Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Capital Metals
The main advantage of trading using opposite Micron Technology and Capital Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Capital Metals 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 Capital Metals will offset losses from the drop in Capital Metals' long position.| Micron Technology vs. Coeur Mining | Micron Technology vs. Invesco Physical Silver | Micron Technology vs. iShares Physical Silver | Micron Technology vs. American Homes 4 |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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