Correlation Between Micron Technology and Barclays PLC
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Barclays PLC 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 Barclays PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Barclays PLC, you can compare the effects of market volatilities on Micron Technology and Barclays PLC 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 Barclays PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Barclays PLC.
Diversification Opportunities for Micron Technology and Barclays PLC
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Micron and Barclays is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Barclays PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays PLC 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 Barclays PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays PLC has no effect on the direction of Micron Technology i.e., Micron Technology and Barclays PLC go up and down completely randomly.
Pair Corralation between Micron Technology and Barclays PLC
Assuming the 90 days horizon Micron Technology is expected to generate 3.26 times less return on investment than Barclays PLC. In addition to that, Micron Technology is 1.66 times more volatile than Barclays PLC. It trades about 0.03 of its total potential returns per unit of risk. Barclays PLC is currently generating about 0.17 per unit of volatility. If you would invest 22,010 in Barclays PLC on September 2, 2024 and sell it today you would earn a total of 4,990 from holding Barclays PLC or generate 22.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
Micron Technology vs. Barclays PLC
Performance |
| Timeline |
| Micron Technology |
| Barclays PLC |
Micron Technology and Barclays PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Barclays PLC
The main advantage of trading using opposite Micron Technology and Barclays PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Barclays PLC 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 Barclays PLC will offset losses from the drop in Barclays PLC's long position.The idea behind Micron Technology and Barclays PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Barclays PLC vs. Deutsche Bank Aktiengesellschaft | Barclays PLC vs. UnitedHealth Group Incorporated | Barclays PLC vs. Monster Beverage Corp | Barclays PLC vs. McEwen Mining |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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