Correlation Between Micron Technology and Thornburg Value
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Thornburg Value 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 Thornburg Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Thornburg Value Fund, you can compare the effects of market volatilities on Micron Technology and Thornburg Value 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 Thornburg Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Thornburg Value.
Diversification Opportunities for Micron Technology and Thornburg Value
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Micron and Thornburg is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Thornburg Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Value 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 Thornburg Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Value has no effect on the direction of Micron Technology i.e., Micron Technology and Thornburg Value go up and down completely randomly.
Pair Corralation between Micron Technology and Thornburg Value
Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Thornburg Value. In addition to that, Micron Technology is 2.85 times more volatile than Thornburg Value Fund. It trades about -0.08 of its total potential returns per unit of risk. Thornburg Value Fund is currently generating about 0.07 per unit of volatility. If you would invest 8,132 in Thornburg Value Fund on September 26, 2024 and sell it today you would earn a total of 418.00 from holding Thornburg Value Fund or generate 5.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Micron Technology vs. Thornburg Value Fund
Performance |
Timeline |
Micron Technology |
Thornburg Value |
Micron Technology and Thornburg Value Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Micron Technology and Thornburg Value
The main advantage of trading using opposite Micron Technology and Thornburg Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Thornburg Value 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 Thornburg Value will offset losses from the drop in Thornburg Value's long position.The idea behind Micron Technology and Thornburg Value Fund 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.Thornburg Value vs. Schwab Treasury Money | Thornburg Value vs. John Hancock Money | Thornburg Value vs. Elfun Government Money | Thornburg Value vs. Chestnut Street Exchange |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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