Correlation Between Micron Technology and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Micron Technology and STMicroelectronics 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 STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and STMicroelectronics NV, you can compare the effects of market volatilities on Micron Technology and STMicroelectronics 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 STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and STMicroelectronics.
Diversification Opportunities for Micron Technology and STMicroelectronics
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Micron and STMicroelectronics is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics 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 STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of Micron Technology i.e., Micron Technology and STMicroelectronics go up and down completely randomly.
Pair Corralation between Micron Technology and STMicroelectronics
Assuming the 90 days trading horizon Micron Technology is expected to generate 1.47 times more return on investment than STMicroelectronics. However, Micron Technology is 1.47 times more volatile than STMicroelectronics NV. It trades about 0.08 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.11 per unit of risk. If you would invest 8,035 in Micron Technology on September 3, 2024 and sell it today you would earn a total of 1,212 from holding Micron Technology or generate 15.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micron Technology vs. STMicroelectronics NV
Performance |
| Timeline |
| Micron Technology |
| STMicroelectronics |
Micron Technology and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and STMicroelectronics
The main advantage of trading using opposite Micron Technology and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, STMicroelectronics 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 STMicroelectronics will offset losses from the drop in STMicroelectronics' long position.| Micron Technology vs. Commonwealth Bank of | Micron Technology vs. COMINTL BANK ADR1 | Micron Technology vs. TYSON FOODS A | Micron Technology vs. COFCO Joycome Foods |
| STMicroelectronics vs. Align Technology | STMicroelectronics vs. Micron Technology | STMicroelectronics vs. Fukuyama Transporting Co | STMicroelectronics vs. FANDIFI TECHNOLOGY P |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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