Correlation Between Micron Technology and Rabbit Holdings

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

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

Diversification Opportunities for Micron Technology and Rabbit Holdings

0.43

Correlation Coefficient

Micron Technology  Rabbit Holdings

Very weak diversification

The 3 months correlation between Micron and Rabbit is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Rabbit Holdings PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rabbit Holdings PCL 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 Rabbit Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rabbit Holdings PCL has no effect on the direction of Micron Technology i.e., Micron Technology and Rabbit Holdings go up and down completely randomly.

Pair Corralation between Micron Technology and Rabbit Holdings

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.66 times more return on investment than Rabbit Holdings. However, Micron Technology is 1.66 times more volatile than Rabbit Holdings PCL. It trades about -0.13 of its potential returns per unit of risk. Rabbit Holdings PCL is currently generating about -0.29 per unit of risk. If you would invest  10,448  in Micron Technology on September 26, 2024 and sell it today you would lose (1,476) from holding Micron Technology or give up 14.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Micron Technology  vs.  Rabbit Holdings PCL

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Rabbit Holdings PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rabbit Holdings PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Micron Technology and Rabbit Holdings

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

The idea behind Micron Technology and Rabbit Holdings PCL 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.