Correlation Between Micron Technology and AltaGas

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

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

Diversification Opportunities for Micron Technology and AltaGas

0.34

Correlation Coefficient

Micron Technology  AltaGas

Weak diversification

The 3 months correlation between Micron and AltaGas is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and AltaGas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AltaGas 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 AltaGas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AltaGas has no effect on the direction of Micron Technology i.e., Micron Technology and AltaGas go up and down completely randomly.

Pair Corralation between Micron Technology and AltaGas

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the AltaGas. In addition to that, Micron Technology is 2.88 times more volatile than AltaGas. It trades about -0.07 of its total potential returns per unit of risk. AltaGas is currently generating about -0.08 per unit of volatility. If you would invest  2,453  in AltaGas on September 27, 2024 and sell it today you would lose (155.00) from holding AltaGas or give up 6.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Micron Technology  vs.  AltaGas

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AltaGas

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Micron Technology and AltaGas

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

The idea behind Micron Technology and AltaGas 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.