Correlation Between Micron Technology and X Fab
Can any of the company-specific risk be diversified away by investing in both Micron Technology and X Fab 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 X Fab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and X Fab Silicon, you can compare the effects of market volatilities on Micron Technology and X Fab 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 X Fab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and X Fab.
Diversification Opportunities for Micron Technology and X Fab
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Micron and XFB is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and X Fab Silicon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Fab Silicon 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 X Fab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Fab Silicon has no effect on the direction of Micron Technology i.e., Micron Technology and X Fab go up and down completely randomly.
Pair Corralation between Micron Technology and X Fab
Assuming the 90 days trading horizon Micron Technology is expected to generate 1.11 times more return on investment than X Fab. However, Micron Technology is 1.11 times more volatile than X Fab Silicon. It trades about 0.06 of its potential returns per unit of risk. X Fab Silicon is currently generating about -0.02 per unit of risk. If you would invest 5,160 in Micron Technology on September 2, 2024 and sell it today you would earn a total of 4,087 from holding Micron Technology or generate 79.21% 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. X Fab Silicon
Performance |
| Timeline |
| Micron Technology |
| X Fab Silicon |
Micron Technology and X Fab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and X Fab
The main advantage of trading using opposite Micron Technology and X Fab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, X Fab 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 X Fab will offset losses from the drop in X Fab's long position.| Micron Technology vs. Apple Inc | Micron Technology vs. Apple Inc | Micron Technology vs. Apple Inc | Micron Technology vs. Apple Inc |
| X Fab vs. Japan Medical Dynamic | X Fab vs. IMAGIN MEDICAL INC | X Fab vs. SAFETY MEDICAL PROD | X Fab vs. Soken Chemical Engineering |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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