Correlation Between Micron Technology and Macquarie Group
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Macquarie Group 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 Micron Technology and Macquarie Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Macquarie Group Limited, you can compare the effects of market volatilities on Micron Technology and Macquarie Group 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 Micron Technology with a short position of Macquarie Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Macquarie Group.
Diversification Opportunities for Micron Technology and Macquarie Group
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Micron and Macquarie is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Macquarie Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group and Micron Technology 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 Micron Technology are associated (or correlated) with Macquarie Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Group has no effect on the direction of Micron Technology i.e., Micron Technology and Macquarie Group go up and down completely randomly.
Pair Corralation between Micron Technology and Macquarie Group
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 2.85 times more return on investment than Macquarie Group. However, Micron Technology is 2.85 times more volatile than Macquarie Group Limited. It trades about 0.0 of its potential returns per unit of risk. Macquarie Group Limited is currently generating about -0.07 per unit of risk. If you would invest 9,389 in Micron Technology on September 24, 2024 and sell it today you would lose (377.00) from holding Micron Technology or give up 4.02% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Micron Technology vs. Macquarie Group Limited
Performance |
Timeline |
Micron Technology |
Macquarie Group |
Micron Technology and Macquarie Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Micron Technology and Macquarie Group
The main advantage of trading using opposite Micron Technology and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Macquarie Group 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 Macquarie Group will offset losses from the drop in Macquarie Group's long position.Micron Technology vs. Diodes Incorporated | Micron Technology vs. Daqo New Energy | Micron Technology vs. Nano Labs | Micron Technology vs. Impinj Inc |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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