Correlation Between Micron Technology and Space Shuttle

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

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

Diversification Opportunities for Micron Technology and Space Shuttle

-0.06

Correlation Coefficient

Micron Technology  Space Shuttle

Good diversification

The 3 months correlation between Micron and Space is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Space Shuttle Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Space Shuttle Hi 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 Space Shuttle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Space Shuttle Hi has no effect on the direction of Micron Technology i.e., Micron Technology and Space Shuttle go up and down completely randomly.

Pair Corralation between Micron Technology and Space Shuttle

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 2.67 times more return on investment than Space Shuttle. However, Micron Technology is 2.67 times more volatile than Space Shuttle Hi Tech. It trades about 0.04 of its potential returns per unit of risk. Space Shuttle Hi Tech is currently generating about 0.02 per unit of risk. If you would invest  8,992  in Micron Technology on December 4, 2024 and sell it today you would earn a total of  128.00  from holding Micron Technology or generate 1.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Micron Technology  vs.  Space Shuttle Hi Tech

Micron Technology

Risk-Adjusted Performance

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 latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Space Shuttle Hi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Space Shuttle Hi Tech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Space Shuttle 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 Space Shuttle

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

The idea behind Micron Technology and Space Shuttle Hi Tech 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..