Correlation Between Micron Technology and NBTM New
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By analyzing existing cross correlation between Micron Technology and NBTM New Materials, you can compare the effects of market volatilities on Micron Technology and NBTM New 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 NBTM New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and NBTM New.
Diversification Opportunities for Micron Technology and NBTM New
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Micron and NBTM is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and NBTM New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBTM New Materials 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 NBTM New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBTM New Materials has no effect on the direction of Micron Technology i.e., Micron Technology and NBTM New go up and down completely randomly.
Pair Corralation between Micron Technology and NBTM New
Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the NBTM New. But the stock apears to be less risky and, when comparing its historical volatility, Micron Technology is 1.05 times less risky than NBTM New. The stock trades about -0.08 of its potential returns per unit of risk. The NBTM New Materials is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,420 in NBTM New Materials on September 26, 2024 and sell it today you would earn a total of 229.00 from holding NBTM New Materials or generate 16.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 93.65% |
Values | Daily Returns |
Micron Technology vs. NBTM New Materials
Performance |
Timeline |
Micron Technology |
NBTM New Materials |
Micron Technology and NBTM New Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Micron Technology and NBTM New
The main advantage of trading using opposite Micron Technology and NBTM New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, NBTM New 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 NBTM New will offset losses from the drop in NBTM New's long position.The idea behind Micron Technology and NBTM New Materials pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.NBTM New vs. Fujian Nanwang Environment | NBTM New vs. Shengda Mining Co | NBTM New vs. Eit Environmental Development | NBTM New vs. JCHX Mining Management |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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