Correlation Between Micron Technology and LGI

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

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

Diversification Opportunities for Micron Technology and LGI

-0.09

Correlation Coefficient

Micron Technology  LGI

Good diversification

The 3 months correlation between Micron and LGI is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and LGI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI 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 LGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LGI has no effect on the direction of Micron Technology i.e., Micron Technology and LGI go up and down completely randomly.

Pair Corralation between Micron Technology and LGI

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the LGI. In addition to that, Micron Technology is 1.63 times more volatile than LGI. It trades about -0.1 of its total potential returns per unit of risk. LGI is currently generating about -0.08 per unit of volatility. If you would invest  313.00  in LGI on September 27, 2024 and sell it today you would lose (18.00) from holding LGI or give up 5.75% of portfolio value over 90 days.

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

Micron Technology  vs.  LGI

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.

LGI

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LGI are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, LGI 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 LGI

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

The idea behind Micron Technology and LGI 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.