Correlation Between Micron Technology and Daimler Truck
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Daimler Truck 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 Daimler Truck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Daimler Truck Holding, you can compare the effects of market volatilities on Micron Technology and Daimler Truck 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 Daimler Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Daimler Truck.
Diversification Opportunities for Micron Technology and Daimler Truck
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Micron and Daimler is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Daimler Truck Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daimler Truck Holding 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 Daimler Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daimler Truck Holding has no effect on the direction of Micron Technology i.e., Micron Technology and Daimler Truck go up and down completely randomly.
Pair Corralation between Micron Technology and Daimler Truck
Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Daimler Truck. In addition to that, Micron Technology is 2.41 times more volatile than Daimler Truck Holding. It trades about -0.13 of its total potential returns per unit of risk. Daimler Truck Holding is currently generating about 0.05 per unit of volatility. If you would invest 3,641 in Daimler Truck Holding on September 24, 2024 and sell it today you would earn a total of 64.00 from holding Daimler Truck Holding or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Micron Technology vs. Daimler Truck Holding
Performance |
| Timeline |
| Micron Technology |
| Daimler Truck Holding |
Micron Technology and Daimler Truck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Daimler Truck
The main advantage of trading using opposite Micron Technology and Daimler Truck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Daimler Truck 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 Daimler Truck will offset losses from the drop in Daimler Truck's long position.| Micron Technology vs. Diodes Incorporated | Micron Technology vs. Daqo New Energy | Micron Technology vs. MagnaChip Semiconductor | Micron Technology vs. Nano Labs |
| Daimler Truck vs. Gold Road Resources | Daimler Truck vs. GOLD ROAD RES | Daimler Truck vs. Fevertree Drinks PLC | Daimler Truck vs. Yuexiu Transport Infrastructure |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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