Correlation Between Sea and Micron Technology
Can any of the company-specific risk be diversified away by investing in both Sea and Micron Technology 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 Sea and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea and Micron Technology, you can compare the effects of market volatilities on Sea and Micron Technology 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 Sea with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and Micron Technology.
Diversification Opportunities for Sea and Micron Technology
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sea and Micron is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and Sea 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 Sea are associated (or correlated) with Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of Sea i.e., Sea and Micron Technology go up and down completely randomly.
Pair Corralation between Sea and Micron Technology
Allowing for the 90-day total investment horizon Sea is expected to generate 0.82 times more return on investment than Micron Technology. However, Sea is 1.22 times less risky than Micron Technology. It trades about 0.19 of its potential returns per unit of risk. Micron Technology is currently generating about 0.05 per unit of risk. If you would invest 3,787 in Sea on September 6, 2024 and sell it today you would earn a total of 7,954 from holding Sea or generate 210.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sea vs. Micron Technology
Performance |
Timeline |
Sea |
Micron Technology |
Sea and Micron Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sea and Micron Technology
The main advantage of trading using opposite Sea and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea position performs unexpectedly, Micron Technology 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 Micron Technology will offset losses from the drop in Micron Technology's long position.The idea behind Sea and Micron Technology 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.Micron Technology vs. NXP Semiconductors NV | Micron Technology vs. Monolithic Power Systems | Micron Technology vs. ON Semiconductor | Micron Technology vs. GSI Technology |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |