Correlation Between Magna International and Micron Technology
Can any of the company-specific risk be diversified away by investing in both Magna International 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 Magna International and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Micron Technology, you can compare the effects of market volatilities on Magna International 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 Magna International with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Micron Technology.
Diversification Opportunities for Magna International and Micron Technology
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Magna and Micron is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and Magna International 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 Magna International 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 Magna International i.e., Magna International and Micron Technology go up and down completely randomly.
Pair Corralation between Magna International and Micron Technology
Considering the 90-day investment horizon Magna International is expected to under-perform the Micron Technology. But the stock apears to be less risky and, when comparing its historical volatility, Magna International is 1.43 times less risky than Micron Technology. The stock trades about 0.0 of its potential returns per unit of risk. The Micron Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7,113 in Micron Technology on September 19, 2024 and sell it today you would earn a total of 3,747 from holding Micron Technology or generate 52.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magna International vs. Micron Technology
Performance |
| Timeline |
| Magna International |
| Micron Technology |
Magna International and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Micron Technology
The main advantage of trading using opposite Magna International and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International 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.| Magna International vs. Ford Motor | Magna International vs. General Motors | Magna International vs. Goodyear Tire Rubber | Magna International vs. Li Auto |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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