Correlation Between Micron Technology and CI Yield

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

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

Diversification Opportunities for Micron Technology and CI Yield

-0.38

Correlation Coefficient

Micron Technology  CI Yield

Very good diversification

The 3 months correlation between Micron and CAGG is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and CI Yield Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Yield Enhanced 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 CI Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Yield Enhanced has no effect on the direction of Micron Technology i.e., Micron Technology and CI Yield go up and down completely randomly.

Pair Corralation between Micron Technology and CI Yield

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the CI Yield. In addition to that, Micron Technology is 5.81 times more volatile than CI Yield Enhanced. It trades about -0.12 of its total potential returns per unit of risk. CI Yield Enhanced is currently generating about 0.15 per unit of volatility. If you would invest  4,471  in CI Yield Enhanced on September 12, 2024 and sell it today you would earn a total of  58.00  from holding CI Yield Enhanced or generate 1.3% 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.  CI Yield Enhanced

Micron Technology

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 7 (%) 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.

CI Yield Enhanced

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CI Yield Enhanced are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CI Yield is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Micron Technology and CI Yield

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

The idea behind Micron Technology and CI Yield Enhanced 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.