Correlation Between Micron Technology and Itech Minerals

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

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

Diversification Opportunities for Micron Technology and Itech Minerals

0.19

Correlation Coefficient

Micron Technology  Itech Minerals

Average diversification

The 3 months correlation between Micron and Itech is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Itech Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itech Minerals 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 Itech Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itech Minerals has no effect on the direction of Micron Technology i.e., Micron Technology and Itech Minerals go up and down completely randomly.

Pair Corralation between Micron Technology and Itech Minerals

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 0.66 times more return on investment than Itech Minerals. However, Micron Technology is 1.52 times less risky than Itech Minerals. It trades about 0.07 of its potential returns per unit of risk. Itech Minerals is currently generating about -0.23 per unit of risk. If you would invest  9,918  in Micron Technology on September 15, 2024 and sell it today you would earn a total of  332.00  from holding Micron Technology or generate 3.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Micron Technology  vs.  Itech Minerals

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

Itech Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Itech Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary 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.

Pair Trading with Micron Technology and Itech Minerals

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

The idea behind Micron Technology and Itech Minerals 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.