Correlation Between Ipsen SA and Micron Technology
Can any of the company-specific risk be diversified away by investing in both Ipsen SA 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 Ipsen SA and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ipsen SA and Micron Technology, you can compare the effects of market volatilities on Ipsen SA 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 Ipsen SA with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ipsen SA and Micron Technology.
Diversification Opportunities for Ipsen SA and Micron Technology
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ipsen and Micron is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ipsen SA and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and Ipsen SA 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 Ipsen SA 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 Ipsen SA i.e., Ipsen SA and Micron Technology go up and down completely randomly.
Pair Corralation between Ipsen SA and Micron Technology
Assuming the 90 days horizon Ipsen SA is expected to generate 6.24 times less return on investment than Micron Technology. But when comparing it to its historical volatility, Ipsen SA is 2.34 times less risky than Micron Technology. It trades about 0.04 of its potential returns per unit of risk. Micron Technology is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 8,223 in Micron Technology on September 13, 2024 and sell it today you would earn a total of 1,516 from holding Micron Technology or generate 18.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ipsen SA vs. Micron Technology
Performance |
Timeline |
Ipsen SA |
Micron Technology |
Ipsen SA and Micron Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ipsen SA and Micron Technology
The main advantage of trading using opposite Ipsen SA and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ipsen SA 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.Ipsen SA vs. Merit Medical Systems | Ipsen SA vs. GUARDANT HEALTH CL | Ipsen SA vs. EPSILON HEALTHCARE LTD | Ipsen SA vs. Natural Health Trends |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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