Correlation Between Micron Technology and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Sterling Capital 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 Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Sterling Capital Total, you can compare the effects of market volatilities on Micron Technology and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Sterling Capital.
Diversification Opportunities for Micron Technology and Sterling Capital
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Micron and Sterling is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Sterling Capital Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Total 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Total has no effect on the direction of Micron Technology i.e., Micron Technology and Sterling Capital go up and down completely randomly.
Pair Corralation between Micron Technology and Sterling Capital
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 14.68 times more return on investment than Sterling Capital. However, Micron Technology is 14.68 times more volatile than Sterling Capital Total. It trades about 0.07 of its potential returns per unit of risk. Sterling Capital Total is currently generating about 0.16 per unit of risk. If you would invest 9,918 in Micron Technology on September 15, 2024 and sell it today you would earn a total of 332.00 from holding Micron Technology or generate 3.35% 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. Sterling Capital Total
Performance |
| Timeline |
| Micron Technology |
| Sterling Capital Total |
Micron Technology and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Sterling Capital
The main advantage of trading using opposite Micron Technology and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| Micron Technology vs. ON Semiconductor | Micron Technology vs. Globalfoundries | Micron Technology vs. Wisekey International Holding | Micron Technology vs. Nano Labs |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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