Correlation Between Micron Technology and American Beacon

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Micron Technology and American Beacon 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 American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and American Beacon Shapiro, you can compare the effects of market volatilities on Micron Technology and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and American Beacon.

Diversification Opportunities for Micron Technology and American Beacon

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Micron and American is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and American Beacon Shapiro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Shapiro 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Shapiro has no effect on the direction of Micron Technology i.e., Micron Technology and American Beacon go up and down completely randomly.

Pair Corralation between Micron Technology and American Beacon

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the American Beacon. In addition to that, Micron Technology is 4.01 times more volatile than American Beacon Shapiro. It trades about -0.07 of its total potential returns per unit of risk. American Beacon Shapiro is currently generating about -0.09 per unit of volatility. If you would invest  1,489  in American Beacon Shapiro on September 13, 2024 and sell it today you would lose (20.00) from holding American Beacon Shapiro or give up 1.34% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Micron Technology  vs.  American Beacon Shapiro

 Performance 
       Timeline  
Micron Technology 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.
American Beacon Shapiro 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon Shapiro are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, American Beacon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Micron Technology and American Beacon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Micron Technology and American Beacon

The main advantage of trading using opposite Micron Technology and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.
The idea behind Micron Technology and American Beacon Shapiro pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

Other Complementary Tools

Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Sectors
List of equity sectors categorizing publicly traded companies based on their primary business activities
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Stocks Directory
Find actively traded stocks across global markets