Correlation Between Micron Technology and Magellan Energy

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

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

Diversification Opportunities for Micron Technology and Magellan Energy

0.0

Correlation Coefficient

Micron Technology  Magellan Energy

Pay attention - limited upside

The 3 months correlation between Micron and Magellan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Magellan Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Energy 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 Magellan Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Energy has no effect on the direction of Micron Technology i.e., Micron Technology and Magellan Energy go up and down completely randomly.

Pair Corralation between Micron Technology and Magellan Energy

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 185.53 times less return on investment than Magellan Energy. But when comparing it to its historical volatility, Micron Technology is 86.81 times less risky than Magellan Energy. It trades about 0.1 of its potential returns per unit of risk. Magellan Energy is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Magellan Energy on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Magellan Energy or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Micron Technology  vs.  Magellan Energy

Micron Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 6 (%) 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.

Magellan Energy

Risk-Adjusted Performance

9 of 100

Very Weak

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

Pair Trading with Micron Technology and Magellan Energy

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

The idea behind Micron Technology and Magellan Energy 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.