Correlation Between Micron Technology and Bank of Nova Scotia
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Bank of Nova Scotia 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 Bank of Nova Scotia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and The Bank of, you can compare the effects of market volatilities on Micron Technology and Bank of Nova Scotia 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 Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Bank of Nova Scotia.
Diversification Opportunities for Micron Technology and Bank of Nova Scotia
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Micron and Bank is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and The Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Nova Scotia 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 Bank of Nova Scotia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Nova Scotia has no effect on the direction of Micron Technology i.e., Micron Technology and Bank of Nova Scotia go up and down completely randomly.
Pair Corralation between Micron Technology and Bank of Nova Scotia
Assuming the 90 days horizon Micron Technology is expected to generate 2.31 times more return on investment than Bank of Nova Scotia. However, Micron Technology is 2.31 times more volatile than The Bank of. It trades about 0.06 of its potential returns per unit of risk. The Bank of is currently generating about 0.06 per unit of risk. If you would invest 108,606 in Micron Technology on August 30, 2024 and sell it today you would earn a total of 93,178 from holding Micron Technology or generate 85.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micron Technology vs. The Bank of
Performance |
| Timeline |
| Micron Technology |
| Bank of Nova Scotia |
Micron Technology and Bank of Nova Scotia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Bank of Nova Scotia
The main advantage of trading using opposite Micron Technology and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Bank of Nova Scotia 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 Bank of Nova Scotia will offset losses from the drop in Bank of Nova Scotia's long position.| Micron Technology vs. Southern Copper | Micron Technology vs. McEwen Mining | Micron Technology vs. GMxico Transportes SAB | Micron Technology vs. New Oriental Education |
| Bank of Nova Scotia vs. Grupo Sports World | Bank of Nova Scotia vs. Grupo Carso SAB | Bank of Nova Scotia vs. UnitedHealth Group Incorporated | Bank of Nova Scotia vs. Cognizant Technology Solutions |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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