Correlation Between Micron Technology and BankUnited

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

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

Diversification Opportunities for Micron Technology and BankUnited

-0.15

Correlation Coefficient

Micron Technology  BankUnited

Good diversification

The 3 months correlation between Micron and BankUnited is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and BankUnited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankUnited 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 BankUnited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankUnited has no effect on the direction of Micron Technology i.e., Micron Technology and BankUnited go up and down completely randomly.

Pair Corralation between Micron Technology and BankUnited

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 2.39 times less return on investment than BankUnited. In addition to that, Micron Technology is 1.45 times more volatile than BankUnited. It trades about 0.02 of its total potential returns per unit of risk. BankUnited is currently generating about 0.08 per unit of volatility. If you would invest  2,666  in BankUnited on October 7, 2024 and sell it today you would earn a total of  1,208  from holding BankUnited or generate 45.31% return on investment over 90 days.

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

Micron Technology  vs.  BankUnited

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.

BankUnited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BankUnited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward-looking signals, BankUnited may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Micron Technology and BankUnited

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

The idea behind Micron Technology and BankUnited 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.