Correlation Between Micron Technology and Hewlett Packard
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Hewlett Packard 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 Hewlett Packard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Hewlett Packard Co, you can compare the effects of market volatilities on Micron Technology and Hewlett Packard 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 Hewlett Packard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Hewlett Packard.
Diversification Opportunities for Micron Technology and Hewlett Packard
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Micron and Hewlett is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Hewlett Packard Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hewlett Packard 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 Hewlett Packard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hewlett Packard has no effect on the direction of Micron Technology i.e., Micron Technology and Hewlett Packard go up and down completely randomly.
Pair Corralation between Micron Technology and Hewlett Packard
Assuming the 90 days trading horizon Micron Technology is expected to generate 1.71 times more return on investment than Hewlett Packard. However, Micron Technology is 1.71 times more volatile than Hewlett Packard Co. It trades about 0.07 of its potential returns per unit of risk. Hewlett Packard Co is currently generating about 0.07 per unit of risk. If you would invest 5,039 in Micron Technology on August 30, 2024 and sell it today you would earn a total of 4,656 from holding Micron Technology or generate 92.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.75% |
| Values | Daily Returns |
Micron Technology vs. Hewlett Packard Co
Performance |
| Timeline |
| Micron Technology |
| Hewlett Packard |
Micron Technology and Hewlett Packard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Hewlett Packard
The main advantage of trading using opposite Micron Technology and Hewlett Packard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Hewlett Packard 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 Hewlett Packard will offset losses from the drop in Hewlett Packard's long position.| Micron Technology vs. GP Investments | Micron Technology vs. Lupatech SA | Micron Technology vs. Marvell Technology | Micron Technology vs. Livetech da Bahia |
| Hewlett Packard vs. Capital One Financial | Hewlett Packard vs. GP Investments | Hewlett Packard vs. Deutsche Bank Aktiengesellschaft | Hewlett Packard vs. Bank of America |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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