Correlation Between STRAYER EDUCATION and Micron Technology
Can any of the company-specific risk be diversified away by investing in both STRAYER EDUCATION 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 STRAYER EDUCATION and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STRAYER EDUCATION and Micron Technology, you can compare the effects of market volatilities on STRAYER EDUCATION 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 STRAYER EDUCATION with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRAYER EDUCATION and Micron Technology.
Diversification Opportunities for STRAYER EDUCATION and Micron Technology
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STRAYER and Micron is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding STRAYER EDUCATION and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and STRAYER EDUCATION 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 STRAYER EDUCATION 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 STRAYER EDUCATION i.e., STRAYER EDUCATION and Micron Technology go up and down completely randomly.
Pair Corralation between STRAYER EDUCATION and Micron Technology
Assuming the 90 days trading horizon STRAYER EDUCATION is expected to under-perform the Micron Technology. But the stock apears to be less risky and, when comparing its historical volatility, STRAYER EDUCATION is 1.58 times less risky than Micron Technology. The stock trades about -0.1 of its potential returns per unit of risk. The Micron Technology is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 9,802 in Micron Technology on December 12, 2024 and sell it today you would lose (1,782) from holding Micron Technology or give up 18.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STRAYER EDUCATION vs. Micron Technology
Performance |
| Timeline |
| STRAYER EDUCATION |
| Micron Technology |
STRAYER EDUCATION and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STRAYER EDUCATION and Micron Technology
The main advantage of trading using opposite STRAYER EDUCATION and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STRAYER EDUCATION 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.| STRAYER EDUCATION vs. Haier Smart Home | ||
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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