Correlation Between Micron Technology and Blackrock High

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

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

Diversification Opportunities for Micron Technology and Blackrock High

0.26

Correlation Coefficient

Micron Technology  Blackrock High

Modest diversification

The 3 months correlation between Micron and Blackrock is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Blackrock High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock High Income 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 Blackrock High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock High Income has no effect on the direction of Micron Technology i.e., Micron Technology and Blackrock High go up and down completely randomly.

Pair Corralation between Micron Technology and Blackrock High

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 7.01 times more return on investment than Blackrock High. However, Micron Technology is 7.01 times more volatile than Blackrock High Income. It trades about 0.05 of its potential returns per unit of risk. Blackrock High Income is currently generating about 0.11 per unit of risk. If you would invest  6,211  in Micron Technology on September 30, 2024 and sell it today you would earn a total of  2,652  from holding Micron Technology or generate 42.7% return on investment over 90 days.

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

Micron Technology  vs.  Blackrock High Income

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 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.

Blackrock High Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock High Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Blackrock High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Micron Technology and Blackrock High

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

The idea behind Micron Technology and Blackrock High Income 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.