Correlation Between Micron Technology and SGI Enhanced
Can any of the company-specific risk be diversified away by investing in both Micron Technology and SGI Enhanced 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 SGI Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and SGI Enhanced Core, you can compare the effects of market volatilities on Micron Technology and SGI Enhanced 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 SGI Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and SGI Enhanced.
Diversification Opportunities for Micron Technology and SGI Enhanced
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Micron and SGI is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and SGI Enhanced Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGI Enhanced Core 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 SGI Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGI Enhanced Core has no effect on the direction of Micron Technology i.e., Micron Technology and SGI Enhanced go up and down completely randomly.
Pair Corralation between Micron Technology and SGI Enhanced
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 36.58 times more return on investment than SGI Enhanced. However, Micron Technology is 36.58 times more volatile than SGI Enhanced Core. It trades about 0.2 of its potential returns per unit of risk. SGI Enhanced Core is currently generating about 0.35 per unit of risk. If you would invest 9,751 in Micron Technology on September 18, 2024 and sell it today you would earn a total of 1,109 from holding Micron Technology or generate 11.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micron Technology vs. SGI Enhanced Core
Performance |
| Timeline |
| Micron Technology |
| SGI Enhanced Core |
Micron Technology and SGI Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and SGI Enhanced
The main advantage of trading using opposite Micron Technology and SGI Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, SGI Enhanced 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 SGI Enhanced will offset losses from the drop in SGI Enhanced'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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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