Correlation Between Beyond Meat and Micron Technology
Can any of the company-specific risk be diversified away by investing in both Beyond Meat 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 Beyond Meat and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beyond Meat and Micron Technology, you can compare the effects of market volatilities on Beyond Meat 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 Beyond Meat with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beyond Meat and Micron Technology.
Diversification Opportunities for Beyond Meat and Micron Technology
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Beyond and Micron is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Meat and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and Beyond Meat 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 Beyond Meat 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 Beyond Meat i.e., Beyond Meat and Micron Technology go up and down completely randomly.
Pair Corralation between Beyond Meat and Micron Technology
Assuming the 90 days trading horizon Beyond Meat is expected to under-perform the Micron Technology. In addition to that, Beyond Meat is 1.34 times more volatile than Micron Technology. It trades about -0.02 of its total potential returns per unit of risk. Micron Technology is currently generating about -0.01 per unit of volatility. If you would invest 11,110 in Micron Technology on September 1, 2024 and sell it today you would lose (1,441) from holding Micron Technology or give up 12.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beyond Meat vs. Micron Technology
Performance |
| Timeline |
| Beyond Meat |
| Micron Technology |
Beyond Meat and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beyond Meat and Micron Technology
The main advantage of trading using opposite Beyond Meat and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beyond Meat 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.| Beyond Meat vs. JBS SA | Beyond Meat vs. M Dias Branco | Beyond Meat vs. Marfrig Global Foods | Beyond Meat vs. Camil Alimentos SA |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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