Correlation Between Micron Technology and BGF Global

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

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

Diversification Opportunities for Micron Technology and BGF Global

0.37

Correlation Coefficient

Micron Technology  BGF Global

Weak diversification

The 3 months correlation between Micron and BGF is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and BGF Global Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Global Allocation 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 BGF Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF Global Allocation has no effect on the direction of Micron Technology i.e., Micron Technology and BGF Global go up and down completely randomly.

Pair Corralation between Micron Technology and BGF Global

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.07 times less return on investment than BGF Global. In addition to that, Micron Technology is 4.33 times more volatile than BGF Global Allocation. It trades about 0.05 of its total potential returns per unit of risk. BGF Global Allocation is currently generating about 0.25 per unit of volatility. If you would invest  7,504  in BGF Global Allocation on September 14, 2024 and sell it today you would earn a total of  226.00  from holding BGF Global Allocation or generate 3.01% return on investment over 90 days.

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

Micron Technology  vs.  BGF Global Allocation

Micron Technology

Risk-Adjusted Performance

7 of 100

Insignificant

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

BGF Global Allocation

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BGF Global Allocation are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather weak technical and fundamental indicators, BGF Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Micron Technology and BGF Global

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

The idea behind Micron Technology and BGF Global Allocation 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.