Correlation Between Micron Technology and AutoNation
Can any of the company-specific risk be diversified away by investing in both Micron Technology and AutoNation 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 AutoNation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and AutoNation, you can compare the effects of market volatilities on Micron Technology and AutoNation 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 AutoNation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and AutoNation.
Diversification Opportunities for Micron Technology and AutoNation
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Micron and AutoNation is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation 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 AutoNation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoNation has no effect on the direction of Micron Technology i.e., Micron Technology and AutoNation go up and down completely randomly.
Pair Corralation between Micron Technology and AutoNation
Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the AutoNation. In addition to that, Micron Technology is 3.28 times more volatile than AutoNation. It trades about -0.14 of its total potential returns per unit of risk. AutoNation is currently generating about -0.03 per unit of volatility. If you would invest 16,415 in AutoNation on September 25, 2024 and sell it today you would lose (185.00) from holding AutoNation or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Micron Technology vs. AutoNation
Performance |
| Timeline |
| Micron Technology |
| AutoNation |
Micron Technology and AutoNation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and AutoNation
The main advantage of trading using opposite Micron Technology and AutoNation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, AutoNation 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 AutoNation will offset losses from the drop in AutoNation's long position.| Micron Technology vs. Diodes Incorporated | Micron Technology vs. Nano Labs | Micron Technology vs. Enphase Energy |
| AutoNation vs. Copart Inc | AutoNation vs. Zhongsheng Group Holdings | AutoNation vs. CarMax Inc | AutoNation vs. DIeteren Group SA |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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