Correlation Between Flex and Micron Technology
Can any of the company-specific risk be diversified away by investing in both Flex 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 Flex and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flex and Micron Technology, you can compare the effects of market volatilities on Flex 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 Flex with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flex and Micron Technology.
Diversification Opportunities for Flex and Micron Technology
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Flex and Micron is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Flex and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and Flex 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 Flex 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 Flex i.e., Flex and Micron Technology go up and down completely randomly.
Pair Corralation between Flex and Micron Technology
Given the investment horizon of 90 days Flex is expected to generate 0.53 times more return on investment than Micron Technology. However, Flex is 1.88 times less risky than Micron Technology. It trades about 0.0 of its potential returns per unit of risk. Micron Technology is currently generating about -0.09 per unit of risk. If you would invest 2,853 in Flex on January 26, 2024 and sell it today you would lose (3.00) from holding Flex or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flex vs. Micron Technology
Performance |
| Timeline |
| Flex |
| Micron Technology |
Flex and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flex and Micron Technology
The main advantage of trading using opposite Flex and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flex 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 Flex 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. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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