Correlation Between Micron Technology and 00206RAG7

Can any of the company-specific risk be diversified away by investing in both Micron Technology and 00206RAG7 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 00206RAG7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Micron Technology and ATT INC 63, you can compare the effects of market volatilities on Micron Technology and 00206RAG7 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 00206RAG7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and 00206RAG7.

Diversification Opportunities for Micron Technology and 00206RAG7

-0.55

Correlation Coefficient

Micron Technology  00206RAG7

Excellent diversification

The 3 months correlation between Micron and 00206RAG7 is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and ATT INC 63 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT INC 63 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 00206RAG7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT INC 63 has no effect on the direction of Micron Technology i.e., Micron Technology and 00206RAG7 go up and down completely randomly.

Pair Corralation between Micron Technology and 00206RAG7

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 2.59 times more return on investment than 00206RAG7. However, Micron Technology is 2.59 times more volatile than ATT INC 63. It trades about 0.05 of its potential returns per unit of risk. ATT INC 63 is currently generating about -0.08 per unit of risk. If you would invest  9,112  in Micron Technology on September 13, 2024 and sell it today you would earn a total of  712.00  from holding Micron Technology or generate 7.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	92.19%
Values	Daily Returns

Micron Technology  vs.  ATT INC 63

Micron Technology

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Micron Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ATT INC 63

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATT INC 63 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 00206RAG7 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 00206RAG7

The main advantage of trading using opposite Micron Technology and 00206RAG7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, 00206RAG7 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 00206RAG7 will offset losses from the drop in 00206RAG7's long position.

The idea behind Micron Technology and ATT INC 63 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 Global Correlations module to find global opportunities by holding instruments from different markets.