Correlation Between Micron Technology and Western Acquisition

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

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

Diversification Opportunities for Micron Technology and Western Acquisition

0.45

Correlation Coefficient

Micron Technology  Western Acquisition

Very weak diversification

The 3 months correlation between Micron and Western is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Western Acquisition Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Acquisition 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 Western Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Acquisition has no effect on the direction of Micron Technology i.e., Micron Technology and Western Acquisition go up and down completely randomly.

Pair Corralation between Micron Technology and Western Acquisition

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Western Acquisition. In addition to that, Micron Technology is 1.71 times more volatile than Western Acquisition Ventures. It trades about -0.07 of its total potential returns per unit of risk. Western Acquisition Ventures is currently generating about 0.02 per unit of volatility. If you would invest  1,060  in Western Acquisition Ventures on September 27, 2024 and sell it today you would earn a total of  15.00  from holding Western Acquisition Ventures or generate 1.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Micron Technology  vs.  Western Acquisition Ventures

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Western Acquisition

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Acquisition Ventures are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Western Acquisition is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Micron Technology and Western Acquisition

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

The idea behind Micron Technology and Western Acquisition Ventures 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.