Correlation Between Edinburgh Investment and Micron Technology
Can any of the company-specific risk be diversified away by investing in both Edinburgh Investment 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 Edinburgh Investment and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edinburgh Investment Trust and Micron Technology, you can compare the effects of market volatilities on Edinburgh Investment 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 Edinburgh Investment with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edinburgh Investment and Micron Technology.
Diversification Opportunities for Edinburgh Investment and Micron Technology
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Edinburgh and Micron is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Edinburgh Investment Trust and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and Edinburgh Investment 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 Edinburgh Investment Trust 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 Edinburgh Investment i.e., Edinburgh Investment and Micron Technology go up and down completely randomly.
Pair Corralation between Edinburgh Investment and Micron Technology
Assuming the 90 days trading horizon Edinburgh Investment is expected to generate 6.33 times less return on investment than Micron Technology. But when comparing it to its historical volatility, Edinburgh Investment Trust is 5.05 times less risky than Micron Technology. It trades about 0.2 of its potential returns per unit of risk. Micron Technology is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 8,955 in Micron Technology on October 24, 2024 and sell it today you would earn a total of 1,796 from holding Micron Technology or generate 20.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edinburgh Investment Trust vs. Micron Technology
Performance |
| Timeline |
| Edinburgh Investment |
| Micron Technology |
Edinburgh Investment and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edinburgh Investment and Micron Technology
The main advantage of trading using opposite Edinburgh Investment and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edinburgh Investment 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.| Edinburgh Investment vs. Bisichi Mining PLC | Edinburgh Investment vs. Cellnex Telecom SA | Edinburgh Investment vs. Telecom Italia SpA | Edinburgh Investment vs. Orient Telecoms |
| Micron Technology vs. Edinburgh Investment Trust | Micron Technology vs. Coeur Mining | Micron Technology vs. McEwen Mining | Micron Technology vs. Beowulf Mining |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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