Correlation Between X Fab and Micron Technology
Can any of the company-specific risk be diversified away by investing in both X Fab 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 X Fab and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X Fab Silicon and Micron Technology, you can compare the effects of market volatilities on X Fab 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 X Fab with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of X Fab and Micron Technology.
Diversification Opportunities for X Fab and Micron Technology
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XFB and Micron is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding X Fab Silicon and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and X Fab 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 X Fab Silicon 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 X Fab i.e., X Fab and Micron Technology go up and down completely randomly.
Pair Corralation between X Fab and Micron Technology
Assuming the 90 days horizon X Fab Silicon is expected to generate 0.84 times more return on investment than Micron Technology. However, X Fab Silicon is 1.2 times less risky than Micron Technology. It trades about 0.0 of its potential returns per unit of risk. Micron Technology is currently generating about -0.03 per unit of risk. If you would invest 420.00 in X Fab Silicon on August 31, 2024 and sell it today you would lose (2.00) from holding X Fab Silicon or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
X Fab Silicon vs. Micron Technology
Performance |
| Timeline |
| X Fab Silicon |
| Micron Technology |
X Fab and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X Fab and Micron Technology
The main advantage of trading using opposite X Fab and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X Fab 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.| X Fab vs. NVIDIA | X Fab vs. Taiwan Semiconductor Manufacturing | X Fab vs. Advanced Micro Devices | X Fab vs. Intel |
| Micron Technology vs. Apple Inc | Micron Technology vs. Apple Inc | Micron Technology vs. Apple Inc | Micron Technology vs. Apple Inc |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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