Correlation Between Micron Technology and CaixaBank

Can any of the company-specific risk be diversified away by investing in both Micron Technology and CaixaBank 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 CaixaBank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Micron Technology and CaixaBank SA, you can compare the effects of market volatilities on Micron Technology and CaixaBank 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 CaixaBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and CaixaBank.

Diversification Opportunities for Micron Technology and CaixaBank

0.15

Correlation Coefficient

Micron Technology  CaixaBank

Average diversification

The 3 months correlation between Micron and CaixaBank is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and CaixaBank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CaixaBank SA 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 CaixaBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CaixaBank SA has no effect on the direction of Micron Technology i.e., Micron Technology and CaixaBank go up and down completely randomly.

Pair Corralation between Micron Technology and CaixaBank

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.08 times less return on investment than CaixaBank. In addition to that, Micron Technology is 1.83 times more volatile than CaixaBank SA. It trades about 0.04 of its total potential returns per unit of risk. CaixaBank SA is currently generating about 0.07 per unit of volatility. If you would invest  373.00  in CaixaBank SA on September 23, 2024 and sell it today you would earn a total of  131.00  from holding CaixaBank SA or generate 35.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.54%
Values	Daily Returns

Micron Technology  vs.  CaixaBank SA

Micron Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Micron Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Micron Technology is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

CaixaBank SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CaixaBank SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, CaixaBank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Micron Technology and CaixaBank

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

The idea behind Micron Technology and CaixaBank SA 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.