Correlation Between Micron Technology and Swift Foods
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Swift Foods 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 Swift Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Swift Foods, you can compare the effects of market volatilities on Micron Technology and Swift Foods 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 Swift Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Swift Foods.
Diversification Opportunities for Micron Technology and Swift Foods
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Micron and Swift is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Swift Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swift Foods 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 Swift Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swift Foods has no effect on the direction of Micron Technology i.e., Micron Technology and Swift Foods go up and down completely randomly.
Pair Corralation between Micron Technology and Swift Foods
Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Swift Foods. But the stock apears to be less risky and, when comparing its historical volatility, Micron Technology is 1.28 times less risky than Swift Foods. The stock trades about -0.07 of its potential returns per unit of risk. The Swift Foods is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 6.40 in Swift Foods on September 25, 2024 and sell it today you would lose (1.00) from holding Swift Foods or give up 15.62% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 90.4% |
Values | Daily Returns |
Micron Technology vs. Swift Foods
Performance |
Timeline |
Micron Technology |
Swift Foods |
Micron Technology and Swift Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Micron Technology and Swift Foods
The main advantage of trading using opposite Micron Technology and Swift Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Swift Foods 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 Swift Foods will offset losses from the drop in Swift Foods' long position.Micron Technology vs. Diodes Incorporated | Micron Technology vs. Nano Labs | Micron Technology vs. Impinj Inc | Micron Technology vs. Enphase Energy |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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