Correlation Between Micron Technology and Crown Castle

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

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

Diversification Opportunities for Micron Technology and Crown Castle

0.2

Correlation Coefficient

Micron Technology  Crown Castle

Modest diversification

The 3 months correlation between Micron and Crown is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Crown Castle International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Castle Interna 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 Crown Castle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Castle Interna has no effect on the direction of Micron Technology i.e., Micron Technology and Crown Castle go up and down completely randomly.

Pair Corralation between Micron Technology and Crown Castle

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Crown Castle. In addition to that, Micron Technology is 1.01 times more volatile than Crown Castle International. It trades about -0.08 of its total potential returns per unit of risk. Crown Castle International is currently generating about -0.04 per unit of volatility. If you would invest  15,524  in Crown Castle International on September 26, 2024 and sell it today you would lose (1,580) from holding Crown Castle International or give up 10.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Micron Technology  vs.  Crown Castle International

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.

Crown Castle Interna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Castle International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Micron Technology and Crown Castle

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

The idea behind Micron Technology and Crown Castle International 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.