Correlation Between FedEx and Micron Technology
Can any of the company-specific risk be diversified away by investing in both FedEx 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 FedEx and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FedEx and Micron Technology, you can compare the effects of market volatilities on FedEx 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 FedEx with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of FedEx and Micron Technology.
Diversification Opportunities for FedEx and Micron Technology
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between FedEx and Micron is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding FedEx and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and FedEx 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 FedEx 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 FedEx i.e., FedEx and Micron Technology go up and down completely randomly.
Pair Corralation between FedEx and Micron Technology
Assuming the 90 days trading horizon FedEx is expected to generate 0.8 times more return on investment than Micron Technology. However, FedEx is 1.26 times less risky than Micron Technology. It trades about 0.14 of its potential returns per unit of risk. Micron Technology is currently generating about 0.06 per unit of risk. If you would invest 160,800 in FedEx on September 13, 2024 and sell it today you would earn a total of 8,016 from holding FedEx or generate 4.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.0% |
| Values | Daily Returns |
FedEx vs. Micron Technology
Performance |
| Timeline |
| FedEx |
| Micron Technology |
FedEx and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FedEx and Micron Technology
The main advantage of trading using opposite FedEx and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FedEx 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.| FedEx vs. Micron Technology | FedEx vs. Paycom Software | FedEx vs. Delta Air Lines | FedEx vs. Brpr Corporate Offices |
| Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Broadcom | Micron Technology vs. Advanced Micro Devices | Micron Technology vs. NXP Semiconductors NV |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |