Correlation Between Micron Technology and Betashares Australian

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

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

Diversification Opportunities for Micron Technology and Betashares Australian

0.42

Correlation Coefficient

Micron Technology  Betashares Australian

Very weak diversification

The 3 months correlation between Micron and Betashares is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Betashares Australian Major in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betashares Australian 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 Betashares Australian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betashares Australian has no effect on the direction of Micron Technology i.e., Micron Technology and Betashares Australian go up and down completely randomly.

Pair Corralation between Micron Technology and Betashares Australian

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 14.55 times more return on investment than Betashares Australian. However, Micron Technology is 14.55 times more volatile than Betashares Australian Major. It trades about 0.05 of its potential returns per unit of risk. Betashares Australian Major is currently generating about 0.14 per unit of risk. If you would invest  7,828  in Micron Technology on September 14, 2024 and sell it today you would earn a total of  2,422  from holding Micron Technology or generate 30.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	57.99%
Values	Daily Returns

Micron Technology  vs.  Betashares Australian Major

Micron Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Betashares Australian

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Betashares Australian Major are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Betashares Australian is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Micron Technology and Betashares Australian

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

The idea behind Micron Technology and Betashares Australian Major 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.