Correlation Between Micron Technology and LTC Properties
Can any of the company-specific risk be diversified away by investing in both Micron Technology and LTC Properties 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 LTC Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and LTC Properties, you can compare the effects of market volatilities on Micron Technology and LTC Properties 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 LTC Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and LTC Properties.
Diversification Opportunities for Micron Technology and LTC Properties
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Micron and LTC is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and LTC Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LTC Properties 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 LTC Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LTC Properties has no effect on the direction of Micron Technology i.e., Micron Technology and LTC Properties go up and down completely randomly.
Pair Corralation between Micron Technology and LTC Properties
Assuming the 90 days trading horizon Micron Technology is expected to generate 2.78 times less return on investment than LTC Properties. In addition to that, Micron Technology is 2.51 times more volatile than LTC Properties. It trades about 0.02 of its total potential returns per unit of risk. LTC Properties is currently generating about 0.17 per unit of volatility. If you would invest 3,474 in LTC Properties on September 1, 2024 and sell it today you would earn a total of 158.00 from holding LTC Properties or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Micron Technology vs. LTC Properties
Performance |
| Timeline |
| Micron Technology |
| LTC Properties |
Micron Technology and LTC Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and LTC Properties
The main advantage of trading using opposite Micron Technology and LTC Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, LTC Properties 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 LTC Properties will offset losses from the drop in LTC Properties' long position.| Micron Technology vs. WT OFFSHORE | Micron Technology vs. Caseys General Stores | Micron Technology vs. SOLSTAD OFFSHORE NK | Micron Technology vs. COSTCO WHOLESALE CDR |
| LTC Properties vs. INVITATION HOMES DL | LTC Properties vs. CENTURIA OFFICE REIT | LTC Properties vs. NURAN WIRELESS INC | LTC Properties vs. Micron Technology |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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