Correlation Between Micron Technology and MG Credit
Can any of the company-specific risk be diversified away by investing in both Micron Technology and MG Credit 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 MG Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and MG Credit Income, you can compare the effects of market volatilities on Micron Technology and MG Credit 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 MG Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and MG Credit.
Diversification Opportunities for Micron Technology and MG Credit
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Micron and MGCI is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and MG Credit Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MG Credit Income 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 MG Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MG Credit Income has no effect on the direction of Micron Technology i.e., Micron Technology and MG Credit go up and down completely randomly.
Pair Corralation between Micron Technology and MG Credit
Assuming the 90 days trading horizon Micron Technology is expected to generate 2.64 times more return on investment than MG Credit. However, Micron Technology is 2.64 times more volatile than MG Credit Income. It trades about 0.04 of its potential returns per unit of risk. MG Credit Income is currently generating about 0.03 per unit of risk. If you would invest 8,576 in Micron Technology on October 29, 2024 and sell it today you would earn a total of 1,756 from holding Micron Technology or generate 20.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Micron Technology vs. MG Credit Income
Performance |
| Timeline |
| Micron Technology |
| MG Credit Income |
Micron Technology and MG Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and MG Credit
The main advantage of trading using opposite Micron Technology and MG Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, MG Credit 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 MG Credit will offset losses from the drop in MG Credit's long position.| Micron Technology vs. BlackRock Frontiers Investment | Micron Technology vs. Liontrust Asset Management | Micron Technology vs. Jupiter Fund Management | Micron Technology vs. InterContinental Hotels Group |
| MG Credit vs. Gaztransport et Technigaz | MG Credit vs. MoneysupermarketCom Group PLC | MG Credit vs. Premier Foods PLC | MG Credit vs. First Class Metals |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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