Correlation Between Micron Technology and Photronics
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Photronics 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 Photronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Photronics, you can compare the effects of market volatilities on Micron Technology and Photronics 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 Photronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Photronics.
Diversification Opportunities for Micron Technology and Photronics
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Micron and Photronics is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Photronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photronics 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 Photronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photronics has no effect on the direction of Micron Technology i.e., Micron Technology and Photronics go up and down completely randomly.
Pair Corralation between Micron Technology and Photronics
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.04 times more return on investment than Photronics. However, Micron Technology is 1.04 times more volatile than Photronics. It trades about 0.04 of its potential returns per unit of risk. Photronics is currently generating about 0.03 per unit of risk. If you would invest 5,906 in Micron Technology on November 1, 2024 and sell it today you would earn a total of 2,995 from holding Micron Technology or generate 50.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Micron Technology vs. Photronics
Performance |
| Timeline |
| Micron Technology |
| Photronics |
Micron Technology and Photronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Photronics
The main advantage of trading using opposite Micron Technology and Photronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Photronics 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 Photronics will offset losses from the drop in Photronics' long position.| Micron Technology vs. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
| Photronics vs. Diodes Incorporated | Photronics vs. Daqo New Energy | Photronics vs. Micron Technology | Photronics vs. MagnaChip Semiconductor |
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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