Correlation Between Microsoft Corp and Micron Technology,

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

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

Diversification Opportunities for Microsoft Corp and Micron Technology,

0.21

Correlation Coefficient

Microsoft Corp  Micron Technology,

Modest diversification

The 3 months correlation between Microsoft and Micron is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp CDR and Micron Technology, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology, and Microsoft Corp 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 Microsoft Corp CDR 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 Microsoft Corp i.e., Microsoft Corp and Micron Technology, go up and down completely randomly.

Pair Corralation between Microsoft Corp and Micron Technology,

Assuming the 90 days trading horizon Microsoft Corp CDR is expected to under-perform the Micron Technology,. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft Corp CDR is 2.52 times less risky than Micron Technology,. The stock trades about -0.12 of its potential returns per unit of risk. The Micron Technology, is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,043  in Micron Technology, on December 24, 2024 and sell it today you would earn a total of  117.00  from holding Micron Technology, or generate 5.73% return on investment over 90 days.

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

Microsoft Corp CDR  vs.  Micron Technology,

Microsoft Corp CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft Corp CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Micron Technology,

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology, are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Micron Technology, may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Microsoft Corp and Micron Technology,

The main advantage of trading using opposite Microsoft Corp and Micron Technology, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft Corp 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 Microsoft Corp CDR 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.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.