Correlation Between Micron Technology and G2D Investments
Can any of the company-specific risk be diversified away by investing in both Micron Technology and G2D Investments 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 G2D Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and G2D Investments, you can compare the effects of market volatilities on Micron Technology and G2D Investments 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 G2D Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and G2D Investments.
Diversification Opportunities for Micron Technology and G2D Investments
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Micron and G2D is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and G2D Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G2D Investments 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 G2D Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G2D Investments has no effect on the direction of Micron Technology i.e., Micron Technology and G2D Investments go up and down completely randomly.
Pair Corralation between Micron Technology and G2D Investments
Assuming the 90 days trading horizon Micron Technology is expected to generate 1.73 times more return on investment than G2D Investments. However, Micron Technology is 1.73 times more volatile than G2D Investments. It trades about 0.01 of its potential returns per unit of risk. G2D Investments is currently generating about 0.01 per unit of risk. If you would invest 10,200 in Micron Technology on August 28, 2024 and sell it today you would lose (43.00) from holding Micron Technology or give up 0.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micron Technology vs. G2D Investments
Performance |
| Timeline |
| Micron Technology |
| G2D Investments |
Micron Technology and G2D Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and G2D Investments
The main advantage of trading using opposite Micron Technology and G2D Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, G2D Investments 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 G2D Investments will offset losses from the drop in G2D Investments' long position.| Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. NXP Semiconductors NV | Micron Technology vs. STMicroelectronics NV |
| G2D Investments vs. Zoom Video Communications | G2D Investments vs. Verizon Communications | G2D Investments vs. Southwest Airlines Co | G2D Investments vs. Bemobi Mobile Tech |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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