Correlation Between Tesla and Micron Technology
Can any of the company-specific risk be diversified away by investing in both Tesla 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 Tesla and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Micron Technology, you can compare the effects of market volatilities on Tesla 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 Tesla with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Micron Technology.
Diversification Opportunities for Tesla and Micron Technology
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tesla and Micron is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and Tesla 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 Tesla Inc 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 Tesla i.e., Tesla and Micron Technology go up and down completely randomly.
Pair Corralation between Tesla and Micron Technology
Assuming the 90 days trading horizon Tesla Inc is expected to generate 1.77 times more return on investment than Micron Technology. However, Tesla is 1.77 times more volatile than Micron Technology. It trades about 0.28 of its potential returns per unit of risk. Micron Technology is currently generating about -0.02 per unit of risk. If you would invest 526,771 in Tesla Inc on August 29, 2024 and sell it today you would earn a total of 169,224 from holding Tesla Inc or generate 32.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc vs. Micron Technology
Performance |
| Timeline |
| Tesla Inc |
| Micron Technology |
Tesla and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Micron Technology
The main advantage of trading using opposite Tesla and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla 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.| Tesla vs. Capital One Financial | Tesla vs. United Airlines Holdings | Tesla vs. Costco Wholesale | Tesla vs. CVS Health |
| Micron Technology vs. Southwest Airlines | Micron Technology vs. Deutsche Bank Aktiengesellschaft | Micron Technology vs. Ameriprise Financial | Micron Technology vs. Costco Wholesale |
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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