Correlation Between Micron Technology and IAMGOLD

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

By analyzing existing cross correlation between Micron Technology and IAMGOLD P 575, you can compare the effects of market volatilities on Micron Technology and IAMGOLD 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 IAMGOLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and IAMGOLD.

Diversification Opportunities for Micron Technology and IAMGOLD

0.54

Correlation Coefficient

Micron Technology  IAMGOLD

Very weak diversification

The 3 months correlation between Micron and IAMGOLD is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and IAMGOLD P 575 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAMGOLD P 575 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 IAMGOLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAMGOLD P 575 has no effect on the direction of Micron Technology i.e., Micron Technology and IAMGOLD go up and down completely randomly.

Pair Corralation between Micron Technology and IAMGOLD

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the IAMGOLD. But the stock apears to be less risky and, when comparing its historical volatility, Micron Technology is 3.12 times less risky than IAMGOLD. The stock trades about -0.07 of its potential returns per unit of risk. The IAMGOLD P 575 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9,432  in IAMGOLD P 575 on September 29, 2024 and sell it today you would lose (1,720) from holding IAMGOLD P 575 or give up 18.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	85.71%
Values	Daily Returns

Micron Technology  vs.  IAMGOLD P 575

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 latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

IAMGOLD P 575

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IAMGOLD P 575 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for IAMGOLD P 575 investors.

Pair Trading with Micron Technology and IAMGOLD

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

The idea behind Micron Technology and IAMGOLD P 575 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.