Correlation Between T-Mobile and Micron Technology
Can any of the company-specific risk be diversified away by investing in both T-Mobile 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 T-Mobile and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Mobile and Micron Technology, you can compare the effects of market volatilities on T-Mobile 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 T-Mobile with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of T-Mobile and Micron Technology.
Diversification Opportunities for T-Mobile and Micron Technology
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between T-Mobile and Micron is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and T-Mobile 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 T Mobile 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 T-Mobile i.e., T-Mobile and Micron Technology go up and down completely randomly.
Pair Corralation between T-Mobile and Micron Technology
Assuming the 90 days horizon T Mobile is expected to under-perform the Micron Technology. But the stock apears to be less risky and, when comparing its historical volatility, T Mobile is 2.75 times less risky than Micron Technology. The stock trades about -0.24 of its potential returns per unit of risk. The Micron Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 9,726 in Micron Technology on October 12, 2024 and sell it today you would earn a total of 72.00 from holding Micron Technology or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
T Mobile vs. Micron Technology
Performance |
| Timeline |
| T Mobile |
| Micron Technology |
T-Mobile and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T-Mobile and Micron Technology
The main advantage of trading using opposite T-Mobile and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T-Mobile 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.| T-Mobile vs. SERI INDUSTRIAL EO | T-Mobile vs. Ross Stores | T-Mobile vs. COSTCO WHOLESALE CDR | T-Mobile vs. Harmony Gold Mining |
| Micron Technology vs. MCEWEN MINING INC | Micron Technology vs. Harmony Gold Mining | Micron Technology vs. Forsys Metals Corp | Micron Technology vs. MAG SILVER |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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