Correlation Between Micron Technology and Assured Guaranty
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Assured Guaranty 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 Assured Guaranty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Assured Guaranty, you can compare the effects of market volatilities on Micron Technology and Assured Guaranty 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 Assured Guaranty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Assured Guaranty.
Diversification Opportunities for Micron Technology and Assured Guaranty
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Micron and Assured is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Assured Guaranty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assured Guaranty 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 Assured Guaranty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assured Guaranty has no effect on the direction of Micron Technology i.e., Micron Technology and Assured Guaranty go up and down completely randomly.
Pair Corralation between Micron Technology and Assured Guaranty
Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Assured Guaranty. In addition to that, Micron Technology is 1.14 times more volatile than Assured Guaranty. It trades about -0.06 of its total potential returns per unit of risk. Assured Guaranty is currently generating about 0.05 per unit of volatility. If you would invest 7,340 in Assured Guaranty on October 7, 2024 and sell it today you would earn a total of 960.00 from holding Assured Guaranty or generate 13.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Micron Technology vs. Assured Guaranty
Performance |
| Timeline |
| Micron Technology |
| Assured Guaranty |
Micron Technology and Assured Guaranty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Assured Guaranty
The main advantage of trading using opposite Micron Technology and Assured Guaranty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Assured Guaranty 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 Assured Guaranty will offset losses from the drop in Assured Guaranty's long position.| Micron Technology vs. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
| Assured Guaranty vs. Delta Air Lines | Assured Guaranty vs. FAIR ISAAC | Assured Guaranty vs. ADRIATIC METALS LS 013355 | Assured Guaranty vs. MAGNUM MINING EXP |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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