Correlation Between Micron Technology and Juniper Networks
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Juniper Networks 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 Juniper Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Juniper Networks, you can compare the effects of market volatilities on Micron Technology and Juniper Networks 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 Juniper Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Juniper Networks.
Diversification Opportunities for Micron Technology and Juniper Networks
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Micron and Juniper is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Juniper Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniper Networks 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 Juniper Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juniper Networks has no effect on the direction of Micron Technology i.e., Micron Technology and Juniper Networks go up and down completely randomly.
Pair Corralation between Micron Technology and Juniper Networks
Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Juniper Networks. In addition to that, Micron Technology is 3.6 times more volatile than Juniper Networks. It trades about -0.08 of its total potential returns per unit of risk. Juniper Networks is currently generating about 0.13 per unit of volatility. If you would invest 3,565 in Juniper Networks on September 21, 2024 and sell it today you would earn a total of 126.00 from holding Juniper Networks or generate 3.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micron Technology vs. Juniper Networks
Performance |
| Timeline |
| Micron Technology |
| Juniper Networks |
Micron Technology and Juniper Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Juniper Networks
The main advantage of trading using opposite Micron Technology and Juniper Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Juniper Networks 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 Juniper Networks will offset losses from the drop in Juniper Networks' long position.The idea behind Micron Technology and Juniper Networks 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.| Juniper Networks vs. Cornish Metals | Juniper Networks vs. Hochschild Mining plc | Juniper Networks vs. European Metals Holdings | Juniper Networks vs. Global Net Lease |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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