Correlation Between Micron Technology and Advanced Micro
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Advanced Micro 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 Advanced Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Advanced Micro Devices, you can compare the effects of market volatilities on Micron Technology and Advanced Micro 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 Advanced Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Advanced Micro.
Diversification Opportunities for Micron Technology and Advanced Micro
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Micron and Advanced is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices 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 Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of Micron Technology i.e., Micron Technology and Advanced Micro go up and down completely randomly.
Pair Corralation between Micron Technology and Advanced Micro
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.51 times more return on investment than Advanced Micro. However, Micron Technology is 1.51 times more volatile than Advanced Micro Devices. It trades about 0.13 of its potential returns per unit of risk. Advanced Micro Devices is currently generating about -0.31 per unit of risk. If you would invest 9,616 in Micron Technology on January 20, 2024 and sell it today you would earn a total of 1,061 from holding Micron Technology or generate 11.03% 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. Advanced Micro Devices
Performance |
| Timeline |
| Micron Technology |
| Advanced Micro Devices |
Micron Technology and Advanced Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Advanced Micro
The main advantage of trading using opposite Micron Technology and Advanced Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Advanced Micro 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 Advanced Micro will offset losses from the drop in Advanced Micro's long position.| Micron Technology vs. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
| Advanced Micro vs. Taiwan Semiconductor Manufacturing | Advanced Micro vs. Intel | Advanced Micro vs. Marvell Technology Group | Advanced Micro vs. Micron 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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