Correlation Between Micron Technology and REX AI

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

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

Diversification Opportunities for Micron Technology and REX AI

0.1

Correlation Coefficient

Micron Technology  REX AI

Average diversification

The 3 months correlation between Micron and REX is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and REX AI Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX AI Equity 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 REX AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX AI Equity has no effect on the direction of Micron Technology i.e., Micron Technology and REX AI go up and down completely randomly.

Pair Corralation between Micron Technology and REX AI

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the REX AI. In addition to that, Micron Technology is 4.62 times more volatile than REX AI Equity. It trades about -0.11 of its total potential returns per unit of risk. REX AI Equity is currently generating about 0.05 per unit of volatility. If you would invest  5,044  in REX AI Equity on September 23, 2024 and sell it today you would earn a total of  49.00  from holding REX AI Equity or generate 0.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Micron Technology  vs.  REX AI Equity

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 comparatively stable basic indicators, Micron Technology is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

REX AI Equity

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in REX AI Equity are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, REX AI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Micron Technology and REX AI

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

The idea behind Micron Technology and REX AI Equity 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.