Correlation Between Micron Technology and Amgen
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Amgen 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 Amgen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Amgen Inc, you can compare the effects of market volatilities on Micron Technology and Amgen 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 Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Amgen.
Diversification Opportunities for Micron Technology and Amgen
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Micron and Amgen is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen 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 Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of Micron Technology i.e., Micron Technology and Amgen go up and down completely randomly.
Pair Corralation between Micron Technology and Amgen
Assuming the 90 days horizon Micron Technology is expected to generate 0.91 times more return on investment than Amgen. However, Micron Technology is 1.1 times less risky than Amgen. It trades about -0.06 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.11 per unit of risk. If you would invest 210,600 in Micron Technology on August 31, 2024 and sell it today you would lose (8,816) from holding Micron Technology or give up 4.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micron Technology vs. Amgen Inc
Performance |
| Timeline |
| Micron Technology |
| Amgen Inc |
Micron Technology and Amgen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Amgen
The main advantage of trading using opposite Micron Technology and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Amgen 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 Amgen will offset losses from the drop in Amgen's long position.| Micron Technology vs. United Airlines Holdings | Micron Technology vs. Hoteles City Express | Micron Technology vs. Ross Stores | Micron Technology vs. Verizon Communications |
| Amgen vs. Capital One Financial | Amgen vs. Ameriprise Financial | Amgen vs. KB Home | Amgen vs. Micron Technology |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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