Correlation Between Micron Technology and AbbVie
Can any of the company-specific risk be diversified away by investing in both Micron Technology and AbbVie 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 AbbVie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and AbbVie Inc, you can compare the effects of market volatilities on Micron Technology and AbbVie 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 AbbVie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and AbbVie.
Diversification Opportunities for Micron Technology and AbbVie
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Micron and AbbVie is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and AbbVie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbbVie Inc 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 AbbVie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbbVie Inc has no effect on the direction of Micron Technology i.e., Micron Technology and AbbVie go up and down completely randomly.
Pair Corralation between Micron Technology and AbbVie
Assuming the 90 days horizon Micron Technology is expected to generate 0.99 times more return on investment than AbbVie. However, Micron Technology is 1.01 times less risky than AbbVie. It trades about 0.03 of its potential returns per unit of risk. AbbVie Inc is currently generating about -0.02 per unit of risk. If you would invest 216,900 in Micron Technology on September 19, 2024 and sell it today you would earn a total of 2,880 from holding Micron Technology or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.56% |
| Values | Daily Returns |
Micron Technology vs. AbbVie Inc
Performance |
| Timeline |
| Micron Technology |
| AbbVie Inc |
Micron Technology and AbbVie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and AbbVie
The main advantage of trading using opposite Micron Technology and AbbVie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, AbbVie 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 AbbVie will offset losses from the drop in AbbVie's long position.| Micron Technology vs. NVIDIA | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Advanced Micro Devices |
| AbbVie vs. Micron Technology | AbbVie vs. McEwen Mining | AbbVie vs. First Majestic Silver | AbbVie vs. Verizon Communications |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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