Correlation Between Micron Technology and Fifth Third

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Can any of the company-specific risk be diversified away by investing in both Micron Technology and Fifth Third 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 Fifth Third into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Fifth Third Bancorp, you can compare the effects of market volatilities on Micron Technology and Fifth Third 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 Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Fifth Third.

Diversification Opportunities for Micron Technology and Fifth Third

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Micron and Fifth is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Fifth Third Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fifth Third Bancorp 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 Fifth Third. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fifth Third Bancorp has no effect on the direction of Micron Technology i.e., Micron Technology and Fifth Third go up and down completely randomly.

Pair Corralation between Micron Technology and Fifth Third

If you would invest  5,781  in Micron Technology on May 10, 2022 and sell it today you would earn a total of  465.00  from holding Micron Technology or generate 8.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Micron Technology  vs.  Fifth Third Bancorp

 Performance (%) 
       Timeline  
Micron Technology 
Micron Performance
0 of 100
Over the last 90 days Micron Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Micron Price Channel

Fifth Third Bancorp 
Fifth Performance
0 of 100
Over the last 90 days Fifth Third Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, Fifth Third is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the insiders.

Micron Technology and Fifth Third Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Micron Technology and Fifth Third

The main advantage of trading using opposite Micron Technology and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Fifth Third 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 Fifth Third will offset losses from the drop in Fifth Third's long position.
The idea behind Micron Technology and Fifth Third Bancorp 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.

Fifth Third Bancorp

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Fifth Third as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Fifth Third's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Fifth Third's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Fifth Third Bancorp.
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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