Correlation Between Micron Technology and Capital Futures

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

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

Diversification Opportunities for Micron Technology and Capital Futures

0.17

Correlation Coefficient

Micron Technology  Capital Futures

Average diversification

The 3 months correlation between Micron and Capital is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Capital Futures Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Futures Corp 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 Capital Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Futures Corp has no effect on the direction of Micron Technology i.e., Micron Technology and Capital Futures go up and down completely randomly.

Pair Corralation between Micron Technology and Capital Futures

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 2.99 times more return on investment than Capital Futures. However, Micron Technology is 2.99 times more volatile than Capital Futures Corp. It trades about 0.2 of its potential returns per unit of risk. Capital Futures Corp is currently generating about -0.06 per unit of risk. If you would invest  9,751  in Micron Technology on September 18, 2024 and sell it today you would earn a total of  1,109  from holding Micron Technology or generate 11.37% return on investment over 90 days.

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

Micron Technology  vs.  Capital Futures Corp

Micron Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Capital Futures Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Futures Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Capital Futures 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 Capital Futures

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

The idea behind Micron Technology and Capital Futures Corp 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.