Correlation Between Micron Technology and Marsico Growth

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

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

Diversification Opportunities for Micron Technology and Marsico Growth

-0.07

Correlation Coefficient

Micron Technology  Marsico Growth

Good diversification

The 3 months correlation between Micron and Marsico is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Marsico Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsico Growth 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 Marsico Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marsico Growth has no effect on the direction of Micron Technology i.e., Micron Technology and Marsico Growth go up and down completely randomly.

Pair Corralation between Micron Technology and Marsico Growth

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Marsico Growth. In addition to that, Micron Technology is 2.93 times more volatile than Marsico Growth. It trades about -0.01 of its total potential returns per unit of risk. Marsico Growth is currently generating about -0.01 per unit of volatility. If you would invest  2,682  in Marsico Growth on September 25, 2024 and sell it today you would lose (28.00) from holding Marsico Growth or give up 1.04% 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.  Marsico Growth

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 comparatively stable basic indicators, Micron Technology is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Marsico Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marsico Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Marsico Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Micron Technology and Marsico Growth

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

The idea behind Micron Technology and Marsico Growth 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.