Correlation Between Micron Technology and Ambev SA
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Ambev SA 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 Ambev SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Ambev SA, you can compare the effects of market volatilities on Micron Technology and Ambev SA 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 Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Ambev SA.
Diversification Opportunities for Micron Technology and Ambev SA
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Micron and Ambev is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Ambev SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA 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 Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA has no effect on the direction of Micron Technology i.e., Micron Technology and Ambev SA go up and down completely randomly.
Pair Corralation between Micron Technology and Ambev SA
Assuming the 90 days horizon Micron Technology is expected to under-perform the Ambev SA. In addition to that, Micron Technology is 1.38 times more volatile than Ambev SA. It trades about -0.1 of its total potential returns per unit of risk. Ambev SA is currently generating about 0.06 per unit of volatility. If you would invest 4,399 in Ambev SA on September 12, 2024 and sell it today you would earn a total of 91.00 from holding Ambev SA or generate 2.07% 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. Ambev SA
Performance |
| Timeline |
| Micron Technology |
| Ambev SA |
Micron Technology and Ambev SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Ambev SA
The main advantage of trading using opposite Micron Technology and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Ambev SA 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 Ambev SA will offset losses from the drop in Ambev SA's long position.| Micron Technology vs. GMxico Transportes SAB | Micron Technology vs. Verizon Communications | Micron Technology vs. Grupo Hotelero Santa | Micron Technology vs. KB Home |
| Ambev SA vs. GMxico Transportes SAB | Ambev SA vs. Samsung Electronics Co | Ambev SA vs. Grupo Sports World | Ambev SA vs. KB Home |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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