Correlation Between BrainChip Holdings and Micron Technology
Can any of the company-specific risk be diversified away by investing in both BrainChip Holdings 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 BrainChip Holdings and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BrainChip Holdings and Micron Technology, you can compare the effects of market volatilities on BrainChip Holdings 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 BrainChip Holdings with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of BrainChip Holdings and Micron Technology.
Diversification Opportunities for BrainChip Holdings and Micron Technology
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BrainChip and Micron is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding BrainChip Holdings and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and BrainChip Holdings 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 BrainChip Holdings 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 BrainChip Holdings i.e., BrainChip Holdings and Micron Technology go up and down completely randomly.
Pair Corralation between BrainChip Holdings and Micron Technology
Assuming the 90 days horizon BrainChip Holdings is expected to generate 2.12 times more return on investment than Micron Technology. However, BrainChip Holdings is 2.12 times more volatile than Micron Technology. It trades about 0.03 of its potential returns per unit of risk. Micron Technology is currently generating about -0.05 per unit of risk. If you would invest 663.00 in BrainChip Holdings on September 1, 2024 and sell it today you would lose (33.00) from holding BrainChip Holdings or give up 4.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BrainChip Holdings vs. Micron Technology
Performance |
| Timeline |
| BrainChip Holdings |
| Micron Technology |
BrainChip Holdings and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BrainChip Holdings and Micron Technology
The main advantage of trading using opposite BrainChip Holdings and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BrainChip Holdings 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.| BrainChip Holdings vs. Power Integrations | BrainChip Holdings vs. MACOM Technology Solutions | BrainChip Holdings vs. Intchains Group Limited | BrainChip Holdings vs. Vishay Intertechnology |
| Micron Technology vs. NXP Semiconductors NV | Micron Technology vs. GSI Technology | Micron Technology vs. MaxLinear | Micron Technology vs. Texas Instruments Incorporated |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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