Correlation Between Micron Technology and IQ Hedge

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Micron Technology and IQ Hedge 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 IQ Hedge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and IQ Hedge Multi-Strategy, you can compare the effects of market volatilities on Micron Technology and IQ Hedge 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 IQ Hedge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and IQ Hedge.

Diversification Opportunities for Micron Technology and IQ Hedge

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Micron and IQ Hedge is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and IQ Hedge Multi-Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Hedge Multi-Strategy 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 IQ Hedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Hedge Multi-Strategy has no effect on the direction of Micron Technology i.e., Micron Technology and IQ Hedge go up and down completely randomly.

Pair Corralation between Micron Technology and IQ Hedge

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 6.58 times more return on investment than IQ Hedge. However, Micron Technology is 6.58 times more volatile than IQ Hedge Multi-Strategy. It trades about 0.18 of its potential returns per unit of risk. IQ Hedge Multi-Strategy is currently generating about 0.29 per unit of risk. If you would invest  5,490  in Micron Technology on May 17, 2022 and sell it today you would earn a total of  1,009  from holding Micron Technology or generate 18.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Micron Technology  vs.  IQ Hedge Multi-Strategy

 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 conflicting 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

IQ Hedge Multi-Strategy 
IQ Hedge Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in IQ Hedge Multi-Strategy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, IQ Hedge is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

IQ Hedge Price Channel

Micron Technology and IQ Hedge Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Micron Technology and IQ Hedge

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

Micron Technology

Pair trading matchups for Micron Technology

The idea behind Micron Technology and IQ Hedge Multi-Strategy 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.

IQ Hedge Multi-Strategy

Pair trading matchups for IQ Hedge

Visa vs. IQ Hedge
Wex vs. IQ Hedge
United Rentals vs. IQ Hedge
Equinix vs. IQ Hedge
Boeing vs. IQ Hedge
Amazon vs. IQ Hedge
Tenneco Automotive vs. IQ Hedge
Salesforce vs. IQ Hedge
Oracle vs. IQ Hedge
Sentinelone Inc vs. IQ Hedge
Vmware vs. IQ Hedge
Graphic Packaging vs. IQ Hedge
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 IQ Hedge 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. IQ Hedge'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, IQ Hedge'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 IQ Hedge Multi-Strategy.
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

Other Complementary Tools

Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Go
Fund Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Go
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go
ETF Directory
Find actively traded Exchange Traded Funds (ETF) from around the world
Go
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Go
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Go
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Go