Correlation Between Micron Technology and COG Financial
Can any of the company-specific risk be diversified away by investing in both Micron Technology and COG Financial 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 COG Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and COG Financial Services, you can compare the effects of market volatilities on Micron Technology and COG Financial 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 COG Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and COG Financial.
Diversification Opportunities for Micron Technology and COG Financial
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Micron and COG is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and COG Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COG Financial Services 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 COG Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COG Financial Services has no effect on the direction of Micron Technology i.e., Micron Technology and COG Financial go up and down completely randomly.
Pair Corralation between Micron Technology and COG Financial
Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the COG Financial. In addition to that, Micron Technology is 1.44 times more volatile than COG Financial Services. It trades about -0.08 of its total potential returns per unit of risk. COG Financial Services is currently generating about -0.01 per unit of volatility. If you would invest 95.00 in COG Financial Services on September 26, 2024 and sell it today you would lose (3.00) from holding COG Financial Services or give up 3.16% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Micron Technology vs. COG Financial Services
Performance |
Timeline |
Micron Technology |
COG Financial Services |
Micron Technology and COG Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Micron Technology and COG Financial
The main advantage of trading using opposite Micron Technology and COG Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, COG Financial 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 COG Financial will offset losses from the drop in COG Financial's long position.The idea behind Micron Technology and COG Financial Services 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.COG Financial vs. Audio Pixels Holdings | COG Financial vs. Iodm | COG Financial vs. Nsx | COG Financial vs. TTG Fintech |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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