Correlation Between ArcelorMittal and Micron Technology
Can any of the company-specific risk be diversified away by investing in both ArcelorMittal 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 ArcelorMittal and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ArcelorMittal SA and Micron Technology, you can compare the effects of market volatilities on ArcelorMittal 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 ArcelorMittal with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ArcelorMittal and Micron Technology.
Diversification Opportunities for ArcelorMittal and Micron Technology
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ArcelorMittal and Micron is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ArcelorMittal SA and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and ArcelorMittal 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 ArcelorMittal 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 ArcelorMittal i.e., ArcelorMittal and Micron Technology go up and down completely randomly.
Pair Corralation between ArcelorMittal and Micron Technology
Assuming the 90 days trading horizon ArcelorMittal SA is expected to generate 0.87 times more return on investment than Micron Technology. However, ArcelorMittal SA is 1.15 times less risky than Micron Technology. It trades about 0.13 of its potential returns per unit of risk. Micron Technology is currently generating about 0.02 per unit of risk. If you would invest 7,057 in ArcelorMittal SA on September 1, 2024 and sell it today you would earn a total of 429.00 from holding ArcelorMittal SA or generate 6.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
ArcelorMittal SA vs. Micron Technology
Performance |
| Timeline |
| ArcelorMittal SA |
| Micron Technology |
ArcelorMittal and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ArcelorMittal and Micron Technology
The main advantage of trading using opposite ArcelorMittal and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ArcelorMittal 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.| ArcelorMittal vs. Micron Technology | ArcelorMittal vs. Marfrig Global Foods | ArcelorMittal vs. Agilent Technologies | ArcelorMittal vs. Ross Stores |
| Micron Technology vs. Dell Technologies | Micron Technology vs. Electronic Arts | Micron Technology vs. Align Technology | Micron Technology vs. BIONTECH SE DRN |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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