Correlation Between Micron Technology and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Micron Technology and KeyCorp 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 KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and KeyCorp, you can compare the effects of market volatilities on Micron Technology and KeyCorp 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 KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and KeyCorp.
Diversification Opportunities for Micron Technology and KeyCorp
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Micron and KeyCorp is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Micron Technology i.e., Micron Technology and KeyCorp go up and down completely randomly.
Pair Corralation between Micron Technology and KeyCorp
Assuming the 90 days trading horizon Micron Technology is expected to generate 0.63 times more return on investment than KeyCorp. However, Micron Technology is 1.59 times less risky than KeyCorp. It trades about 0.06 of its potential returns per unit of risk. KeyCorp is currently generating about 0.04 per unit of risk. If you would invest 4,844 in Micron Technology on September 3, 2024 and sell it today you would earn a total of 4,825 from holding Micron Technology or generate 99.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 69.6% |
| Values | Daily Returns |
Micron Technology vs. KeyCorp
Performance |
| Timeline |
| Micron Technology |
| KeyCorp |
Micron Technology and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and KeyCorp
The main advantage of trading using opposite Micron Technology and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, KeyCorp 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 KeyCorp will offset losses from the drop in KeyCorp's long position.| Micron Technology vs. CM Hospitalar SA | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Delta Air Lines | Micron Technology vs. Planet Fitness |
| KeyCorp vs. Mitsubishi UFJ Financial | KeyCorp vs. GP Investments | KeyCorp vs. United Rentals | KeyCorp vs. Prudential Financial |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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