Correlation Between Canon Marketing and Micron Technology

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

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

Diversification Opportunities for Canon Marketing and Micron Technology

-0.51

Correlation Coefficient

Canon Marketing  Micron Technology

Excellent diversification

The 3 months correlation between Canon and Micron is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Canon Marketing Japan and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and Canon Marketing 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 Canon Marketing Japan 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 Canon Marketing i.e., Canon Marketing and Micron Technology go up and down completely randomly.

Pair Corralation between Canon Marketing and Micron Technology

Assuming the 90 days horizon Canon Marketing Japan is expected to generate 0.29 times more return on investment than Micron Technology. However, Canon Marketing Japan is 3.5 times less risky than Micron Technology. It trades about 0.09 of its potential returns per unit of risk. Micron Technology is currently generating about 0.01 per unit of risk. If you would invest  3,040  in Canon Marketing Japan on December 1, 2024 and sell it today you would earn a total of  200.00  from holding Canon Marketing Japan or generate 6.58% return on investment over 90 days.

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

Canon Marketing Japan  vs.  Micron Technology

Canon Marketing Japan

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canon Marketing Japan are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Canon Marketing may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Micron Technology

Risk-Adjusted Performance

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 comparatively stable basic indicators, Micron Technology is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Canon Marketing and Micron Technology

The main advantage of trading using opposite Canon Marketing and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canon Marketing 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 Canon Marketing Japan 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..