Correlation Between FibraHotel and Micron Technology
Can any of the company-specific risk be diversified away by investing in both FibraHotel 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 FibraHotel and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FibraHotel and Micron Technology, you can compare the effects of market volatilities on FibraHotel 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 FibraHotel with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of FibraHotel and Micron Technology.
Diversification Opportunities for FibraHotel and Micron Technology
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FibraHotel and Micron is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding FibraHotel and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and FibraHotel 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 FibraHotel 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 FibraHotel i.e., FibraHotel and Micron Technology go up and down completely randomly.
Pair Corralation between FibraHotel and Micron Technology
Assuming the 90 days trading horizon FibraHotel is expected to generate 2.3 times less return on investment than Micron Technology. But when comparing it to its historical volatility, FibraHotel is 2.24 times less risky than Micron Technology. It trades about 0.07 of its potential returns per unit of risk. Micron Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 180,400 in Micron Technology on November 3, 2024 and sell it today you would earn a total of 8,800 from holding Micron Technology or generate 4.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FibraHotel vs. Micron Technology
Performance |
| Timeline |
| FibraHotel |
| Micron Technology |
FibraHotel and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FibraHotel and Micron Technology
The main advantage of trading using opposite FibraHotel and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FibraHotel 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.| FibraHotel vs. Cognizant Technology Solutions | FibraHotel vs. FIBRA Storage | FibraHotel vs. First Republic Bank | FibraHotel vs. United States Steel |
| Micron Technology vs. First Republic Bank | Micron Technology vs. Deutsche Bank Aktiengesellschaft | Micron Technology vs. Prudential Financial | Micron Technology vs. UnitedHealth Group 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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