Correlation Between Micron Technology, and Bank of America
Can any of the company-specific risk be diversified away by investing in both Micron Technology, and Bank of America 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 America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology, and Bank of America, you can compare the effects of market volatilities on Micron Technology, and Bank of America 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 America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology, and Bank of America.
Diversification Opportunities for Micron Technology, and Bank of America
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Micron and Bank is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology, and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America 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 America. 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 America has no effect on the direction of Micron Technology, i.e., Micron Technology, and Bank of America go up and down completely randomly.
Pair Corralation between Micron Technology, and Bank of America
Assuming the 90 days trading horizon Micron Technology, is expected to generate 3.14 times more return on investment than Bank of America. However, Micron Technology, is 3.14 times more volatile than Bank of America. It trades about 0.33 of its potential returns per unit of risk. Bank of America is currently generating about 0.3 per unit of risk. If you would invest 2,042 in Micron Technology, on October 23, 2024 and sell it today you would earn a total of 464.00 from holding Micron Technology, or generate 22.72% 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. Bank of America
Performance |
| Timeline |
| Micron Technology, |
| Bank of America |
Micron Technology, and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology, and Bank of America
The main advantage of trading using opposite Micron Technology, and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology, position performs unexpectedly, Bank of America 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 America will offset losses from the drop in Bank of America's long position.| Micron Technology, vs. Jamieson Wellness | Micron Technology, vs. WELL Health Technologies | Micron Technology, vs. Canadian Utilities Limited | Micron Technology, vs. Bausch Health Companies |
| Bank of America vs. Upstart Investments | Bank of America vs. Datable Technology Corp | Bank of America vs. 2028 Investment Grade | Bank of America vs. Quorum Information Technologies |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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