Correlation Between Micron Technology and NESTE OYJ

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Can any of the company-specific risk be diversified away by investing in both Micron Technology and NESTE OYJ 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 NESTE OYJ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and NESTE OYJ UNSPADR, you can compare the effects of market volatilities on Micron Technology and NESTE OYJ 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 NESTE OYJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and NESTE OYJ.

Diversification Opportunities for Micron Technology and NESTE OYJ

MicronNESTEDiversified AwayMicronNESTEDiversified Away100%
-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between Micron and NESTE is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and NESTE OYJ UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESTE OYJ UNSPADR 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 NESTE OYJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESTE OYJ UNSPADR has no effect on the direction of Micron Technology i.e., Micron Technology and NESTE OYJ go up and down completely randomly.

Pair Corralation between Micron Technology and NESTE OYJ

Assuming the 90 days trading horizon Micron Technology is expected to generate 1.64 times more return on investment than NESTE OYJ. However, Micron Technology is 1.64 times more volatile than NESTE OYJ UNSPADR. It trades about 0.19 of its potential returns per unit of risk. NESTE OYJ UNSPADR is currently generating about -0.29 per unit of risk. If you would invest  9,228  in Micron Technology on September 19, 2024 and sell it today you would earn a total of  1,128  from holding Micron Technology or generate 12.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Micron Technology  vs.  NESTE OYJ UNSPADR

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -20-100102030
JavaScript chart by amCharts 3.21.15MTE NEFA
       Timeline  
Micron Technology 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec859095100105
NESTE OYJ UNSPADR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NESTE OYJ UNSPADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec66.577.588.5

Micron Technology and NESTE OYJ Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.22-7.66-5.09-2.520.04582.755.498.2410.99 0.010.020.030.040.05
JavaScript chart by amCharts 3.21.15MTE NEFA
       Returns  

Pair Trading with Micron Technology and NESTE OYJ

The main advantage of trading using opposite Micron Technology and NESTE OYJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, NESTE OYJ 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 NESTE OYJ will offset losses from the drop in NESTE OYJ's long position.
The idea behind Micron Technology and NESTE OYJ UNSPADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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