Correlation Between Micron Technology and Asia Opportunity
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Asia Opportunity 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 Asia Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Asia Opportunity Portfolio, you can compare the effects of market volatilities on Micron Technology and Asia Opportunity 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 Asia Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Asia Opportunity.
Diversification Opportunities for Micron Technology and Asia Opportunity
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Micron and Asia is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Asia Opportunity Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Opportunity Por 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 Asia Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Opportunity Por has no effect on the direction of Micron Technology i.e., Micron Technology and Asia Opportunity go up and down completely randomly.
Pair Corralation between Micron Technology and Asia Opportunity
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 3.57 times more return on investment than Asia Opportunity. However, Micron Technology is 3.57 times more volatile than Asia Opportunity Portfolio. It trades about 0.3 of its potential returns per unit of risk. Asia Opportunity Portfolio is currently generating about -0.26 per unit of risk. If you would invest 8,698 in Micron Technology on October 20, 2024 and sell it today you would earn a total of 1,877 from holding Micron Technology or generate 21.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micron Technology vs. Asia Opportunity Portfolio
Performance |
| Timeline |
| Micron Technology |
| Asia Opportunity Por |
Micron Technology and Asia Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Asia Opportunity
The main advantage of trading using opposite Micron Technology and Asia Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Asia Opportunity 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 Asia Opportunity will offset losses from the drop in Asia Opportunity's long position.| Micron Technology vs. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
| Asia Opportunity vs. Emerging Markets Equity | Asia Opportunity vs. Global Fixed Income | Asia Opportunity vs. Global Fixed Income | Asia Opportunity vs. Global Fixed Income |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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