Correlation Between SCOTT TECHNOLOGY and Micron Technology
Can any of the company-specific risk be diversified away by investing in both SCOTT TECHNOLOGY and Micron Technology 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 SCOTT TECHNOLOGY and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOTT TECHNOLOGY and Micron Technology, you can compare the effects of market volatilities on SCOTT TECHNOLOGY and Micron Technology 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 SCOTT TECHNOLOGY with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOTT TECHNOLOGY and Micron Technology.
Diversification Opportunities for SCOTT TECHNOLOGY and Micron Technology
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between SCOTT and Micron is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and SCOTT 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 SCOTT TECHNOLOGY are associated (or correlated) with Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and Micron Technology go up and down completely randomly.
Pair Corralation between SCOTT TECHNOLOGY and Micron Technology
Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to generate 12.97 times less return on investment than Micron Technology. But when comparing it to its historical volatility, SCOTT TECHNOLOGY is 1.57 times less risky than Micron Technology. It trades about 0.03 of its potential returns per unit of risk. Micron Technology is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 8,461 in Micron Technology on October 29, 2024 and sell it today you would earn a total of 1,360 from holding Micron Technology or generate 16.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCOTT TECHNOLOGY vs. Micron Technology
Performance |
| Timeline |
| SCOTT TECHNOLOGY |
| Micron Technology |
SCOTT TECHNOLOGY and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOTT TECHNOLOGY and Micron Technology
The main advantage of trading using opposite SCOTT TECHNOLOGY and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOTT TECHNOLOGY position performs unexpectedly, Micron Technology 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 Micron Technology will offset losses from the drop in Micron Technology's long position.| SCOTT TECHNOLOGY vs. GREENX METALS LTD | SCOTT TECHNOLOGY vs. Sanyo Chemical Industries | SCOTT TECHNOLOGY vs. Calibre Mining Corp | SCOTT TECHNOLOGY vs. MCEWEN MINING INC |
| Micron Technology vs. Altair Engineering | Micron Technology vs. UNIVERSAL DISPLAY | Micron Technology vs. SEALED AIR | Micron Technology vs. ARISTOCRAT LEISURE |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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