Correlation Between Neinor Homes and Micron Technology
Can any of the company-specific risk be diversified away by investing in both Neinor Homes and Micron Technology 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 Neinor Homes and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neinor Homes SA and Micron Technology, you can compare the effects of market volatilities on Neinor Homes and Micron Technology 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 Neinor Homes with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neinor Homes and Micron Technology.
Diversification Opportunities for Neinor Homes and Micron Technology
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Neinor and Micron is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Neinor Homes SA and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and Neinor Homes 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 Neinor Homes SA are associated (or correlated) with Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of Neinor Homes i.e., Neinor Homes and Micron Technology go up and down completely randomly.
Pair Corralation between Neinor Homes and Micron Technology
Assuming the 90 days trading horizon Neinor Homes SA is expected to generate 0.42 times more return on investment than Micron Technology. However, Neinor Homes SA is 2.36 times less risky than Micron Technology. It trades about 0.02 of its potential returns per unit of risk. Micron Technology is currently generating about -0.01 per unit of risk. If you would invest 1,500 in Neinor Homes SA on September 3, 2024 and sell it today you would earn a total of 4.00 from holding Neinor Homes SA or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neinor Homes SA vs. Micron Technology
Performance |
| Timeline |
| Neinor Homes SA |
| Micron Technology |
Neinor Homes and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neinor Homes and Micron Technology
The main advantage of trading using opposite Neinor Homes and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neinor Homes position performs unexpectedly, Micron Technology 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 Micron Technology will offset losses from the drop in Micron Technology's long position.| Neinor Homes vs. Playtech plc | Neinor Homes vs. LG Display Co | Neinor Homes vs. NorAm Drilling AS | Neinor Homes vs. InPlay Oil Corp |
| Micron Technology vs. Commonwealth Bank of | Micron Technology vs. COMINTL BANK ADR1 | Micron Technology vs. TYSON FOODS A | Micron Technology vs. COFCO Joycome Foods |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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