Correlation Between Micron Technology and Microsoft
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Microsoft 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 Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Microsoft, you can compare the effects of market volatilities on Micron Technology and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Microsoft.
Diversification Opportunities for Micron Technology and Microsoft
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Micron and Microsoft is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Micron Technology i.e., Micron Technology and Microsoft go up and down completely randomly.
Pair Corralation between Micron Technology and Microsoft
If you would invest 9,992 in Micron Technology on September 14, 2024 and sell it today you would earn a total of 214.00 from holding Micron Technology or generate 2.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 9.52% |
| Values | Daily Returns |
Micron Technology vs. Microsoft
Performance |
| Timeline |
| Micron Technology |
| Microsoft |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Micron Technology and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Microsoft
The main advantage of trading using opposite Micron Technology and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| Micron Technology vs. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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