Correlation Between Micron Technology and First Majestic
Can any of the company-specific risk be diversified away by investing in both Micron Technology and First Majestic 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 First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and First Majestic Silver, you can compare the effects of market volatilities on Micron Technology and First Majestic 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 First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and First Majestic.
Diversification Opportunities for Micron Technology and First Majestic
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Micron and First is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver 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 First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of Micron Technology i.e., Micron Technology and First Majestic go up and down completely randomly.
Pair Corralation between Micron Technology and First Majestic
Assuming the 90 days horizon Micron Technology is expected to generate 3.93 times more return on investment than First Majestic. However, Micron Technology is 3.93 times more volatile than First Majestic Silver. It trades about -0.02 of its potential returns per unit of risk. First Majestic Silver is currently generating about -0.13 per unit of risk. If you would invest 213,337 in Micron Technology on August 29, 2024 and sell it today you would lose (4,837) from holding Micron Technology or give up 2.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micron Technology vs. First Majestic Silver
Performance |
| Timeline |
| Micron Technology |
| First Majestic Silver |
Micron Technology and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and First Majestic
The main advantage of trading using opposite Micron Technology and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, First Majestic 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 First Majestic will offset losses from the drop in First Majestic's long position.| Micron Technology vs. Southwest Airlines | Micron Technology vs. Deutsche Bank Aktiengesellschaft | Micron Technology vs. Ameriprise Financial | Micron Technology vs. Costco Wholesale |
| First Majestic vs. Visa Inc | First Majestic vs. Desarrolladora Homex SAB | First Majestic vs. CMR SAB de | First Majestic vs. The Select Sector |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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