Correlation Between Eltek and Micron Technology
Can any of the company-specific risk be diversified away by investing in both Eltek 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 Eltek and Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eltek and Micron Technology, you can compare the effects of market volatilities on Eltek 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 Eltek with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eltek and Micron Technology.
Diversification Opportunities for Eltek and Micron Technology
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Eltek and Micron is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Eltek and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and Eltek 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 Eltek 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 Eltek i.e., Eltek and Micron Technology go up and down completely randomly.
Pair Corralation between Eltek and Micron Technology
Given the investment horizon of 90 days Eltek is expected to under-perform the Micron Technology. In addition to that, Eltek is 2.19 times more volatile than Micron Technology. It trades about -0.09 of its total potential returns per unit of risk. Micron Technology is currently generating about 0.22 per unit of volatility. If you would invest 8,320 in Micron Technology on January 17, 2024 and sell it today you would earn a total of 3,817 from holding Micron Technology or generate 45.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eltek vs. Micron Technology
Performance |
| Timeline |
| Eltek |
| Micron Technology |
Eltek and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eltek and Micron Technology
The main advantage of trading using opposite Eltek and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eltek 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.| Eltek vs. Methode Electronics | Eltek vs. OSI Systems | Eltek vs. Bel Fuse A | Eltek vs. Richardson Electronics |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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