Correlation Between Micron Technology and FOX P

Can any of the company-specific risk be diversified away by investing in both Micron Technology and FOX P 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 FOX P into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Micron Technology and FOX P B, you can compare the effects of market volatilities on Micron Technology and FOX P 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 FOX P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and FOX P.

Diversification Opportunities for Micron Technology and FOX P

-0.18

Correlation Coefficient

Micron Technology  FOX P

Good diversification

The 3 months correlation between Micron and FOX is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and FOX P B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOX P B 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 FOX P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOX P B has no effect on the direction of Micron Technology i.e., Micron Technology and FOX P go up and down completely randomly.

Pair Corralation between Micron Technology and FOX P

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 43.01 times less return on investment than FOX P. In addition to that, Micron Technology is 2.09 times more volatile than FOX P B. It trades about 0.0 of its total potential returns per unit of risk. FOX P B is currently generating about 0.24 per unit of volatility. If you would invest  3,340  in FOX P B on September 24, 2024 and sell it today you would earn a total of  1,040  from holding FOX P B or generate 31.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Micron Technology  vs.  FOX P B

Micron Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Micron Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Micron Technology is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

FOX P B

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FOX P B are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FOX P reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and FOX P

The main advantage of trading using opposite Micron Technology and FOX P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, FOX P 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 FOX P will offset losses from the drop in FOX P's long position.

The idea behind Micron Technology and FOX P B 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.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.