Correlation Between Micron Technology and GrafTech International
Can any of the company-specific risk be diversified away by investing in both Micron Technology and GrafTech International 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 GrafTech International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and GrafTech International, you can compare the effects of market volatilities on Micron Technology and GrafTech International 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 GrafTech International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and GrafTech International.
Diversification Opportunities for Micron Technology and GrafTech International
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Micron and GrafTech is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and GrafTech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GrafTech International 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 GrafTech International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GrafTech International has no effect on the direction of Micron Technology i.e., Micron Technology and GrafTech International go up and down completely randomly.
Pair Corralation between Micron Technology and GrafTech International
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 0.53 times more return on investment than GrafTech International. However, Micron Technology is 1.88 times less risky than GrafTech International. It trades about 0.06 of its potential returns per unit of risk. GrafTech International is currently generating about -0.01 per unit of risk. If you would invest 4,988 in Micron Technology on September 23, 2024 and sell it today you would earn a total of 4,024 from holding Micron Technology or generate 80.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.03% |
Values | Daily Returns |
Micron Technology vs. GrafTech International
Performance |
Timeline |
Micron Technology |
GrafTech International |
Micron Technology and GrafTech International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Micron Technology and GrafTech International
The main advantage of trading using opposite Micron Technology and GrafTech International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, GrafTech International 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 GrafTech International will offset losses from the drop in GrafTech International's long position.Micron Technology vs. Diodes Incorporated | Micron Technology vs. Daqo New Energy | Micron Technology vs. MagnaChip Semiconductor | Micron Technology vs. Nano Labs |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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