Correlation Between Micron Technology and Ceridian HCM

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

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

Diversification Opportunities for Micron Technology and Ceridian HCM

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Correlation Coefficient

Micron Technology  Ceridian HCM

Pay attention - limited upside

The 3 months correlation between Micron and Ceridian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Ceridian HCM Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceridian HCM Holding 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 Ceridian HCM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceridian HCM Holding has no effect on the direction of Micron Technology i.e., Micron Technology and Ceridian HCM go up and down completely randomly.

Pair Corralation between Micron Technology and Ceridian HCM

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.31 times more return on investment than Ceridian HCM. However, Micron Technology is 1.31 times more volatile than Ceridian HCM Holding. It trades about 0.04 of its potential returns per unit of risk. Ceridian HCM Holding is currently generating about -0.04 per unit of risk. If you would invest  5,945  in Micron Technology on October 3, 2024 and sell it today you would earn a total of  2,471  from holding Micron Technology or generate 41.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	23.63%
Values	Daily Returns

Micron Technology  vs.  Ceridian HCM Holding

Micron Technology

Risk-Adjusted Performance

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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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ceridian HCM Holding

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Ceridian HCM Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Ceridian HCM is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Micron Technology and Ceridian HCM

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

The idea behind Micron Technology and Ceridian HCM Holding 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.