Correlation Between Micron Technology and Fredonia Mining
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Fredonia Mining 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 Fredonia Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Fredonia Mining, you can compare the effects of market volatilities on Micron Technology and Fredonia Mining 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 Fredonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Fredonia Mining.
Diversification Opportunities for Micron Technology and Fredonia Mining
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Micron and Fredonia is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Fredonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fredonia Mining 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 Fredonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fredonia Mining has no effect on the direction of Micron Technology i.e., Micron Technology and Fredonia Mining go up and down completely randomly.
Pair Corralation between Micron Technology and Fredonia Mining
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 0.56 times more return on investment than Fredonia Mining. However, Micron Technology is 1.78 times less risky than Fredonia Mining. It trades about -0.15 of its potential returns per unit of risk. Fredonia Mining is currently generating about -0.16 per unit of risk. If you would invest 10,276 in Micron Technology on September 22, 2024 and sell it today you would lose (1,567) from holding Micron Technology or give up 15.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Micron Technology vs. Fredonia Mining
Performance |
| Timeline |
| Micron Technology |
| Fredonia Mining |
Micron Technology and Fredonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Fredonia Mining
The main advantage of trading using opposite Micron Technology and Fredonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Fredonia Mining 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 Fredonia Mining will offset losses from the drop in Fredonia Mining's long position.| Micron Technology vs. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
| Fredonia Mining vs. Canso Select Opportunities | Fredonia Mining vs. Exco Technologies Limited | Fredonia Mining vs. Precious Metals And | Fredonia Mining vs. Lion One Metals |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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