Correlation Between Micron Technology and Benchmark Electronics
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Benchmark Electronics 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 Benchmark Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Benchmark Electronics, you can compare the effects of market volatilities on Micron Technology and Benchmark Electronics 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 Benchmark Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Benchmark Electronics.
Diversification Opportunities for Micron Technology and Benchmark Electronics
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Micron and Benchmark is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Benchmark Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Electronics 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 Benchmark Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benchmark Electronics has no effect on the direction of Micron Technology i.e., Micron Technology and Benchmark Electronics go up and down completely randomly.
Pair Corralation between Micron Technology and Benchmark Electronics
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 2.98 times more return on investment than Benchmark Electronics. However, Micron Technology is 2.98 times more volatile than Benchmark Electronics. It trades about 0.13 of its potential returns per unit of risk. Benchmark Electronics is currently generating about 0.16 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micron Technology vs. Benchmark Electronics
Performance |
| Timeline |
| Micron Technology |
| Benchmark Electronics |
Micron Technology and Benchmark Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Benchmark Electronics
The main advantage of trading using opposite Micron Technology and Benchmark Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Benchmark Electronics 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 Benchmark Electronics will offset losses from the drop in Benchmark Electronics' long position.| Micron Technology vs. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
| Benchmark Electronics vs. Maximus | Benchmark Electronics vs. Network 1 Technologies | Benchmark Electronics vs. First Advantage Corp | Benchmark Electronics vs. BrightView Holdings |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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