Correlation Between Micron Technology and Dexterra

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

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

Diversification Opportunities for Micron Technology and Dexterra

-0.23

Correlation Coefficient

Micron Technology  Dexterra

Very good diversification

The 3 months correlation between Micron and Dexterra is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Dexterra Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexterra Group 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 Dexterra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexterra Group has no effect on the direction of Micron Technology i.e., Micron Technology and Dexterra go up and down completely randomly.

Pair Corralation between Micron Technology and Dexterra

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.67 times more return on investment than Dexterra. However, Micron Technology is 1.67 times more volatile than Dexterra Group. It trades about 0.07 of its potential returns per unit of risk. Dexterra Group is currently generating about 0.07 per unit of risk. If you would invest  4,942  in Micron Technology on September 17, 2024 and sell it today you would earn a total of  5,308  from holding Micron Technology or generate 107.41% 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.  Dexterra Group

Micron Technology

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dexterra Group

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dexterra Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dexterra may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Micron Technology and Dexterra

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

The idea behind Micron Technology and Dexterra Group 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.

Check out your portfolio center.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.