Correlation Between Micron Technology and Item 9

Can any of the company-specific risk be diversified away by investing in both Micron Technology and Item 9 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 Item 9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Micron Technology and Item 9 Labs, you can compare the effects of market volatilities on Micron Technology and Item 9 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 Item 9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Item 9.

Diversification Opportunities for Micron Technology and Item 9

0.1

Correlation Coefficient

Micron Technology  Item 9

Average diversification

The 3 months correlation between Micron and Item is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Item 9 Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Item 9 Labs 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 Item 9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Item 9 Labs has no effect on the direction of Micron Technology i.e., Micron Technology and Item 9 go up and down completely randomly.

Pair Corralation between Micron Technology and Item 9

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 92.85 times less return on investment than Item 9. But when comparing it to its historical volatility, Micron Technology is 55.93 times less risky than Item 9. It trades about 0.1 of its potential returns per unit of risk. Item 9 Labs is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Item 9 Labs on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Item 9 Labs or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Micron Technology  vs.  Item 9 Labs

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 unfluctuating basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Item 9 Labs

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Item 9 Labs are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Item 9 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and Item 9

The main advantage of trading using opposite Micron Technology and Item 9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Item 9 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 Item 9 will offset losses from the drop in Item 9's long position.

The idea behind Micron Technology and Item 9 Labs 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.