Correlation Between Micron Technology and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Prudential Jennison 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 Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Prudential Jennison Growth, you can compare the effects of market volatilities on Micron Technology and Prudential Jennison 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 Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Prudential Jennison.
Diversification Opportunities for Micron Technology and Prudential Jennison
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Micron and Prudential is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Prudential Jennison Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison 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 Prudential Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Jennison has no effect on the direction of Micron Technology i.e., Micron Technology and Prudential Jennison go up and down completely randomly.
Pair Corralation between Micron Technology and Prudential Jennison
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 2.18 times more return on investment than Prudential Jennison. However, Micron Technology is 2.18 times more volatile than Prudential Jennison Growth. It trades about 0.07 of its potential returns per unit of risk. Prudential Jennison Growth is currently generating about 0.1 per unit of risk. If you would invest 4,883 in Micron Technology on September 12, 2024 and sell it today you would earn a total of 4,927 from holding Micron Technology or generate 100.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Micron Technology vs. Prudential Jennison Growth
Performance |
| Timeline |
| Micron Technology |
| Prudential Jennison |
Micron Technology and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Prudential Jennison
The main advantage of trading using opposite Micron Technology and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Prudential Jennison 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 Prudential Jennison will offset losses from the drop in Prudential Jennison's long position.| Micron Technology vs. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
| Prudential Jennison vs. American Funds The | Prudential Jennison vs. American Funds The | Prudential Jennison vs. Growth Fund Of | Prudential Jennison vs. Growth Fund Of |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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