Correlation Between Micron Technology and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Micron Technology and IShares Trust 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 IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and iShares Trust, you can compare the effects of market volatilities on Micron Technology and IShares Trust 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 IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and IShares Trust.
Diversification Opportunities for Micron Technology and IShares Trust
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Micron and IShares is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Micron Technology i.e., Micron Technology and IShares Trust go up and down completely randomly.
Pair Corralation between Micron Technology and IShares Trust
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 21.99 times more return on investment than IShares Trust. However, Micron Technology is 21.99 times more volatile than iShares Trust. It trades about 0.06 of its potential returns per unit of risk. iShares Trust is currently generating about 0.04 per unit of risk. If you would invest 4,959 in Micron Technology on September 13, 2024 and sell it today you would earn a total of 4,865 from holding Micron Technology or generate 98.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 5.05% |
| Values | Daily Returns |
Micron Technology vs. iShares Trust
Performance |
| Timeline |
| Micron Technology |
| iShares Trust |
Micron Technology and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and IShares Trust
The main advantage of trading using opposite Micron Technology and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, IShares Trust 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 IShares Trust will offset losses from the drop in IShares Trust's long position.| Micron Technology vs. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
| IShares Trust vs. Global X Funds | IShares Trust vs. US Treasury 12 | IShares Trust vs. Tidal Trust II | IShares Trust vs. Franklin Liberty Treasury |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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