Correlation Between Micron Technology and Impax Asset
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Impax Asset 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 Impax Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Impax Asset Management, you can compare the effects of market volatilities on Micron Technology and Impax Asset 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 Impax Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Impax Asset.
Diversification Opportunities for Micron Technology and Impax Asset
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Micron and Impax is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Impax Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impax Asset Management 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 Impax Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impax Asset Management has no effect on the direction of Micron Technology i.e., Micron Technology and Impax Asset go up and down completely randomly.
Pair Corralation between Micron Technology and Impax Asset
Assuming the 90 days trading horizon Micron Technology is expected to generate 1.05 times more return on investment than Impax Asset. However, Micron Technology is 1.05 times more volatile than Impax Asset Management. It trades about 0.05 of its potential returns per unit of risk. Impax Asset Management is currently generating about -0.07 per unit of risk. If you would invest 6,050 in Micron Technology on October 16, 2024 and sell it today you would earn a total of 3,621 from holding Micron Technology or generate 59.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Micron Technology vs. Impax Asset Management
Performance |
| Timeline |
| Micron Technology |
| Impax Asset Management |
Micron Technology and Impax Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Impax Asset
The main advantage of trading using opposite Micron Technology and Impax Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Impax Asset 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 Impax Asset will offset losses from the drop in Impax Asset's long position.The idea behind Micron Technology and Impax Asset Management pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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