Correlation Between Micron Technology and Xtrackers

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

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

Diversification Opportunities for Micron Technology and Xtrackers

-0.03

Correlation Coefficient

Micron Technology  Xtrackers

Good diversification

The 3 months correlation between Micron and Xtrackers is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Xtrackers SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers SP 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 Xtrackers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers SP has no effect on the direction of Micron Technology i.e., Micron Technology and Xtrackers go up and down completely randomly.

Pair Corralation between Micron Technology and Xtrackers

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Xtrackers. In addition to that, Micron Technology is 2.29 times more volatile than Xtrackers SP. It trades about -0.08 of its total potential returns per unit of risk. Xtrackers SP is currently generating about 0.15 per unit of volatility. If you would invest  20,040  in Xtrackers SP on September 26, 2024 and sell it today you would earn a total of  2,925  from holding Xtrackers SP or generate 14.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Micron Technology  vs.  Xtrackers SP

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.

Xtrackers SP

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers SP are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Xtrackers reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and Xtrackers

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

The idea behind Micron Technology and Xtrackers SP 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.