Correlation Between Medical Properties and Micron Technology

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

By analyzing existing cross correlation between Medical Properties Trust and Micron Technology, you can compare the effects of market volatilities on Medical Properties and Micron Technology 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 Medical Properties with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and Micron Technology.

Diversification Opportunities for Medical Properties and Micron Technology

0.67

Correlation Coefficient

Medical Properties  Micron Technology

Poor diversification

The 3 months correlation between Medical and Micron is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and Medical Properties 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 Medical Properties Trust are associated (or correlated) with Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of Medical Properties i.e., Medical Properties and Micron Technology go up and down completely randomly.

Pair Corralation between Medical Properties and Micron Technology

Assuming the 90 days trading horizon Medical Properties Trust is expected to under-perform the Micron Technology. But the stock apears to be less risky and, when comparing its historical volatility, Medical Properties Trust is 1.46 times less risky than Micron Technology. The stock trades about -0.09 of its potential returns per unit of risk. The Micron Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  10,539  in Micron Technology on October 10, 2024 and sell it today you would earn a total of  18.00  from holding Micron Technology or generate 0.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Medical Properties Trust  vs.  Micron Technology

Medical Properties Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medical Properties Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Micron Technology

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Medical Properties and Micron Technology

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

The idea behind Medical Properties Trust and Micron Technology 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .