Correlation Between Micron Technology and Lam Research
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Lam Research 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 Lam Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Lam Research Corp, you can compare the effects of market volatilities on Micron Technology and Lam Research 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 Lam Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Lam Research.
Diversification Opportunities for Micron Technology and Lam Research
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Micron and Lam is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Lam Research Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lam Research Corp 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 Lam Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lam Research Corp has no effect on the direction of Micron Technology i.e., Micron Technology and Lam Research go up and down completely randomly.
Pair Corralation between Micron Technology and Lam Research
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.26 times more return on investment than Lam Research. However, Micron Technology is 1.26 times more volatile than Lam Research Corp. It trades about 0.03 of its potential returns per unit of risk. Lam Research Corp is currently generating about 0.0 per unit of risk. If you would invest 8,534 in Micron Technology on November 8, 2024 and sell it today you would earn a total of 826.00 from holding Micron Technology or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micron Technology vs. Lam Research Corp
Performance |
| Timeline |
| Micron Technology |
| Lam Research Corp |
Micron Technology and Lam Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Lam Research
The main advantage of trading using opposite Micron Technology and Lam Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Lam Research 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 Lam Research will offset losses from the drop in Lam Research's long position.| Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group | Micron Technology vs. Advanced Micro Devices |
| Lam Research vs. ASML Holding NV | Lam Research vs. KLA Tencor | Lam Research vs. Axcelis Technologies | Lam Research vs. Teradyne |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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