Correlation Between Micron Technology and Global X

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

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

Diversification Opportunities for Micron Technology and Global X

0.77

Correlation Coefficient

Micron Technology  Global X

Poor diversification

The 3 months correlation between Micron and Global is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Micron Technology i.e., Micron Technology and Global X go up and down completely randomly.

Pair Corralation between Micron Technology and Global X

Assuming the 90 days trading horizon Micron Technology is expected to generate 2.14 times more return on investment than Global X. However, Micron Technology is 2.14 times more volatile than Global X Funds. It trades about 0.07 of its potential returns per unit of risk. Global X Funds is currently generating about 0.07 per unit of risk. If you would invest  5,288  in Micron Technology on August 31, 2024 and sell it today you would earn a total of  4,381  from holding Micron Technology or generate 82.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.47%
Values	Daily Returns

Micron Technology  vs.  Global X Funds

Micron Technology

Risk-Adjusted Performance

4 of 100

Insignificant

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. Despite somewhat weak basic indicators, Micron Technology may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Global X Funds

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Micron Technology and Global X

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

The idea behind Micron Technology and Global X Funds 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.