Correlation Between Micron Technology and Cajxx

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

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

Diversification Opportunities for Micron Technology and Cajxx

0.22

Correlation Coefficient

Micron Technology  Cajxx

Modest diversification

The 3 months correlation between Micron and Cajxx is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Cajxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cajxx 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 Cajxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cajxx has no effect on the direction of Micron Technology i.e., Micron Technology and Cajxx go up and down completely randomly.

Pair Corralation between Micron Technology and Cajxx

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Cajxx. But the stock apears to be less risky and, when comparing its historical volatility, Micron Technology is 12.91 times less risky than Cajxx. The stock trades about -0.07 of its potential returns per unit of risk. The Cajxx is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  521.00  in Cajxx on September 30, 2024 and sell it today you would lose (421.00) from holding Cajxx or give up 80.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

Micron Technology  vs.  Cajxx

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.

Cajxx

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cajxx are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Cajxx showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and Cajxx

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

The idea behind Micron Technology and Cajxx 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.