Correlation Between Micron Technology and Medibank Private
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Medibank Private 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 Medibank Private into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Medibank Private, you can compare the effects of market volatilities on Micron Technology and Medibank Private 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 Medibank Private. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Medibank Private.
Diversification Opportunities for Micron Technology and Medibank Private
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Micron and Medibank is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Medibank Private in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medibank Private 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 Medibank Private. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medibank Private has no effect on the direction of Micron Technology i.e., Micron Technology and Medibank Private go up and down completely randomly.
Pair Corralation between Micron Technology and Medibank Private
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 2.26 times more return on investment than Medibank Private. However, Micron Technology is 2.26 times more volatile than Medibank Private. It trades about 0.06 of its potential returns per unit of risk. Medibank Private is currently generating about 0.06 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 | 99.2% |
| Values | Daily Returns |
Micron Technology vs. Medibank Private
Performance |
| Timeline |
| Micron Technology |
| Medibank Private |
Micron Technology and Medibank Private Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Medibank Private
The main advantage of trading using opposite Micron Technology and Medibank Private positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Medibank Private 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 Medibank Private will offset losses from the drop in Medibank Private's long position.| Micron Technology vs. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
| Medibank Private vs. Westpac Banking | Medibank Private vs. National Australia Bank | Medibank Private vs. National Australia Bank | Medibank Private vs. National Australia Bank |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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