Correlation Between Micron Technology, and Canfor

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

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

Diversification Opportunities for Micron Technology, and Canfor

0.58

Correlation Coefficient

Micron Technology,  Canfor

Very weak diversification

The 3 months correlation between Micron and Canfor is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology, and Canfor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor 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 Canfor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canfor has no effect on the direction of Micron Technology, i.e., Micron Technology, and Canfor go up and down completely randomly.

Pair Corralation between Micron Technology, and Canfor

Assuming the 90 days trading horizon Micron Technology, is expected to generate 3.15 times more return on investment than Canfor. However, Micron Technology, is 3.15 times more volatile than Canfor. It trades about 0.04 of its potential returns per unit of risk. Canfor is currently generating about -0.28 per unit of risk. If you would invest  2,256  in Micron Technology, on October 11, 2024 and sell it today you would earn a total of  25.00  from holding Micron Technology, or generate 1.11% 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.  Canfor

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 very healthy basic indicators, Micron Technology, is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Canfor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canfor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Micron Technology, and Canfor

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

The idea behind Micron Technology, and Canfor 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.