Correlation Between Micron Technology and Coronation Balanced

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

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

Diversification Opportunities for Micron Technology and Coronation Balanced

0.32

Correlation Coefficient

Micron Technology  Coronation Balanced

Weak diversification

The 3 months correlation between Micron and Coronation is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Coronation Balanced Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronation Balanced Plus 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 Coronation Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coronation Balanced Plus has no effect on the direction of Micron Technology i.e., Micron Technology and Coronation Balanced go up and down completely randomly.

Pair Corralation between Micron Technology and Coronation Balanced

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 6.76 times more return on investment than Coronation Balanced. However, Micron Technology is 6.76 times more volatile than Coronation Balanced Plus. It trades about 0.07 of its potential returns per unit of risk. Coronation Balanced Plus is currently generating about 0.31 per unit of risk. If you would invest  9,918  in Micron Technology on September 15, 2024 and sell it today you would earn a total of  332.00  from holding Micron Technology or generate 3.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Micron Technology  vs.  Coronation Balanced Plus

Micron Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Coronation Balanced Plus

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Balanced Plus are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly weak basic indicators, Coronation Balanced may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Micron Technology and Coronation Balanced

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

The idea behind Micron Technology and Coronation Balanced Plus 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.