Correlation Between Micron Technology and GEORGIA

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

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

Diversification Opportunities for Micron Technology and GEORGIA

-0.57

Correlation Coefficient

Micron Technology  GEORGIA

Excellent diversification

The 3 months correlation between Micron and GEORGIA is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and GEORGIA POWER PANY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEORGIA POWER PANY 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 GEORGIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEORGIA POWER PANY has no effect on the direction of Micron Technology i.e., Micron Technology and GEORGIA go up and down completely randomly.

Pair Corralation between Micron Technology and GEORGIA

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 25.27 times less return on investment than GEORGIA. But when comparing it to its historical volatility, Micron Technology is 26.73 times less risky than GEORGIA. It trades about 0.07 of its potential returns per unit of risk. GEORGIA POWER PANY is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6,993  in GEORGIA POWER PANY on September 14, 2024 and sell it today you would lose (59.00) from holding GEORGIA POWER PANY or give up 0.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	78.59%
Values	Daily Returns

Micron Technology  vs.  GEORGIA POWER PANY

Micron Technology

Risk-Adjusted Performance

7 of 100

OK

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.

GEORGIA POWER PANY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEORGIA POWER PANY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for GEORGIA POWER PANY investors.

Pair Trading with Micron Technology and GEORGIA

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

The idea behind Micron Technology and GEORGIA POWER PANY 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..