Correlation Between Micron Technology and CARRIER

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

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

Diversification Opportunities for Micron Technology and CARRIER

0.13

Correlation Coefficient

Micron Technology  CARRIER

Average diversification

The 3 months correlation between Micron and CARRIER is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and CARRIER GLOBAL P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARRIER GLOBAL P 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 CARRIER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARRIER GLOBAL P has no effect on the direction of Micron Technology i.e., Micron Technology and CARRIER go up and down completely randomly.

Pair Corralation between Micron Technology and CARRIER

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 5.81 times more return on investment than CARRIER. However, Micron Technology is 5.81 times more volatile than CARRIER GLOBAL P. It trades about 0.0 of its potential returns per unit of risk. CARRIER GLOBAL P is currently generating about -0.16 per unit of risk. If you would invest  9,346  in Micron Technology on September 23, 2024 and sell it today you would lose (334.00) from holding Micron Technology or give up 3.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Micron Technology  vs.  CARRIER GLOBAL P

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 comparatively stable basic indicators, Micron Technology is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

CARRIER GLOBAL P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CARRIER GLOBAL P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CARRIER GLOBAL P investors.

Pair Trading with Micron Technology and CARRIER

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

The idea behind Micron Technology and CARRIER GLOBAL P 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.