Correlation Between Micron Technology and ABB PAR
Can any of the company-specific risk be diversified away by investing in both Micron Technology and ABB PAR 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 ABB PAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and ABB PAR AB, you can compare the effects of market volatilities on Micron Technology and ABB PAR 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 ABB PAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and ABB PAR.
Diversification Opportunities for Micron Technology and ABB PAR
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Micron and ABB is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and ABB PAR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABB PAR AB 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 ABB PAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABB PAR AB has no effect on the direction of Micron Technology i.e., Micron Technology and ABB PAR go up and down completely randomly.
Pair Corralation between Micron Technology and ABB PAR
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.32 times more return on investment than ABB PAR. However, Micron Technology is 1.32 times more volatile than ABB PAR AB. It trades about 0.05 of its potential returns per unit of risk. ABB PAR AB is currently generating about 0.03 per unit of risk. If you would invest 5,581 in Micron Technology on September 28, 2024 and sell it today you would earn a total of 3,266 from holding Micron Technology or generate 58.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.61% |
| Values | Daily Returns |
Micron Technology vs. ABB PAR AB
Performance |
| Timeline |
| Micron Technology |
| ABB PAR AB |
Micron Technology and ABB PAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and ABB PAR
The main advantage of trading using opposite Micron Technology and ABB PAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, ABB PAR 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 ABB PAR will offset losses from the drop in ABB PAR's long position.| Micron Technology vs. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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