Correlation Between Micron Technology and Simt Tax

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

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

Diversification Opportunities for Micron Technology and Simt Tax

0.16

Correlation Coefficient

Micron Technology  Simt Tax

Average diversification

The 3 months correlation between Micron and Simt is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Simt Tax Managed Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Tax Managed 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 Simt Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Tax Managed has no effect on the direction of Micron Technology i.e., Micron Technology and Simt Tax go up and down completely randomly.

Pair Corralation between Micron Technology and Simt Tax

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.62 times more return on investment than Simt Tax. However, Micron Technology is 1.62 times more volatile than Simt Tax Managed Large. It trades about 0.2 of its potential returns per unit of risk. Simt Tax Managed Large is currently generating about -0.18 per unit of risk. If you would invest  9,751  in Micron Technology on September 19, 2024 and sell it today you would earn a total of  1,109  from holding Micron Technology or generate 11.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Micron Technology  vs.  Simt Tax Managed Large

Micron Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Simt Tax Managed

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Simt Tax Managed Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Simt Tax is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Micron Technology and Simt Tax

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

The idea behind Micron Technology and Simt Tax Managed Large 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.