Correlation Between Micron Technology and Everlight Electronics

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

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

Diversification Opportunities for Micron Technology and Everlight Electronics

0.43

Correlation Coefficient

Micron Technology  Everlight Electronics

Very weak diversification

The 3 months correlation between Micron and Everlight is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Everlight Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everlight Electronics 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 Everlight Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everlight Electronics has no effect on the direction of Micron Technology i.e., Micron Technology and Everlight Electronics go up and down completely randomly.

Pair Corralation between Micron Technology and Everlight Electronics

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.98 times more return on investment than Everlight Electronics. However, Micron Technology is 1.98 times more volatile than Everlight Electronics Co. It trades about 0.05 of its potential returns per unit of risk. Everlight Electronics Co is currently generating about 0.0 per unit of risk. If you would invest  8,531  in Micron Technology on December 29, 2024 and sell it today you would earn a total of  585.00  from holding Micron Technology or generate 6.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.8%
Values	Daily Returns

Micron Technology  vs.  Everlight Electronics Co

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 comparatively weak basic indicators, Micron Technology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Everlight Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Everlight Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Everlight Electronics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Micron Technology and Everlight Electronics

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

The idea behind Micron Technology and Everlight Electronics Co 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.