Correlation Between Micron Technology and Catalent

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

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

Diversification Opportunities for Micron Technology and Catalent

-0.6

Correlation Coefficient

Micron Technology  Catalent

Excellent diversification

The 3 months correlation between Micron and Catalent is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent 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 Catalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalent has no effect on the direction of Micron Technology i.e., Micron Technology and Catalent go up and down completely randomly.

Pair Corralation between Micron Technology and Catalent

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Catalent. In addition to that, Micron Technology is 5.52 times more volatile than Catalent. It trades about -0.15 of its total potential returns per unit of risk. Catalent is currently generating about 0.28 per unit of volatility. If you would invest  5,816  in Catalent on October 4, 2024 and sell it today you would earn a total of  177.00  from holding Catalent or generate 3.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	61.9%
Values	Daily Returns

Micron Technology  vs.  Catalent

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 weak 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.

Catalent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Catalent is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Micron Technology and Catalent

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

The idea behind Micron Technology and Catalent 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 Transaction History module to view history of all your transactions and understand their impact on performance.