Correlation Between Micron Technology and Voestalpine
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Voestalpine 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 Voestalpine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Voestalpine AG PK, you can compare the effects of market volatilities on Micron Technology and Voestalpine 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 Voestalpine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Voestalpine.
Diversification Opportunities for Micron Technology and Voestalpine
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Micron and Voestalpine is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Voestalpine AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voestalpine AG PK 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 Voestalpine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voestalpine AG PK has no effect on the direction of Micron Technology i.e., Micron Technology and Voestalpine go up and down completely randomly.
Pair Corralation between Micron Technology and Voestalpine
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 0.92 times more return on investment than Voestalpine. However, Micron Technology is 1.09 times less risky than Voestalpine. It trades about 0.07 of its potential returns per unit of risk. Voestalpine AG PK is currently generating about 0.0 per unit of risk. If you would invest 5,004 in Micron Technology on September 19, 2024 and sell it today you would earn a total of 5,856 from holding Micron Technology or generate 117.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micron Technology vs. Voestalpine AG PK
Performance |
| Timeline |
| Micron Technology |
| Voestalpine AG PK |
Micron Technology and Voestalpine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Voestalpine
The main advantage of trading using opposite Micron Technology and Voestalpine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Voestalpine 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 Voestalpine will offset losses from the drop in Voestalpine's long position.The idea behind Micron Technology and Voestalpine AG PK 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.| Voestalpine vs. Gerdau SA ADR | Voestalpine vs. Usinas Siderurgicas de | Voestalpine vs. Ternium SA ADR | Voestalpine vs. POSCO Holdings |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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