Correlation Between Micron Technology and First Quantum
Can any of the company-specific risk be diversified away by investing in both Micron Technology and First Quantum 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 Micron Technology and First Quantum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and First Quantum Minerals, you can compare the effects of market volatilities on Micron Technology and First Quantum 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 Micron Technology with a short position of First Quantum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and First Quantum.
Diversification Opportunities for Micron Technology and First Quantum
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Micron and First is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and First Quantum Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Quantum Minerals and Micron Technology 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 Micron Technology are associated (or correlated) with First Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Quantum Minerals has no effect on the direction of Micron Technology i.e., Micron Technology and First Quantum go up and down completely randomly.
Pair Corralation between Micron Technology and First Quantum
Assuming the 90 days trading horizon Micron Technology is expected to generate 1.36 times more return on investment than First Quantum. However, Micron Technology is 1.36 times more volatile than First Quantum Minerals. It trades about 0.41 of its potential returns per unit of risk. First Quantum Minerals is currently generating about 0.03 per unit of risk. If you would invest 8,488 in Micron Technology on October 25, 2024 and sell it today you would earn a total of 1,992 from holding Micron Technology or generate 23.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micron Technology vs. First Quantum Minerals
Performance |
| Timeline |
| Micron Technology |
| First Quantum Minerals |
Micron Technology and First Quantum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and First Quantum
The main advantage of trading using opposite Micron Technology and First Quantum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, First Quantum 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 First Quantum will offset losses from the drop in First Quantum's long position.| Micron Technology vs. X FAB Silicon Foundries | Micron Technology vs. TITAN MACHINERY | Micron Technology vs. Federal Agricultural Mortgage | Micron Technology vs. Scandinavian Tobacco Group |
| First Quantum vs. CARDINAL HEALTH | First Quantum vs. Phibro Animal Health | First Quantum vs. TOREX SEMICONDUCTOR LTD | First Quantum vs. Tower Semiconductor |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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