Correlation Between Micron Technology and Granada Gold

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

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

Diversification Opportunities for Micron Technology and Granada Gold

0.48

Correlation Coefficient

Micron Technology  Granada Gold

Very weak diversification

The 3 months correlation between Micron and Granada is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Granada Gold Mine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granada Gold Mine 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 Granada Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granada Gold Mine has no effect on the direction of Micron Technology i.e., Micron Technology and Granada Gold go up and down completely randomly.

Pair Corralation between Micron Technology and Granada Gold

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 11.25 times less return on investment than Granada Gold. But when comparing it to its historical volatility, Micron Technology is 6.66 times less risky than Granada Gold. It trades about 0.05 of its potential returns per unit of risk. Granada Gold Mine is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Granada Gold Mine on October 7, 2024 and sell it today you would earn a total of  0.00  from holding Granada Gold Mine or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Micron Technology  vs.  Granada Gold Mine

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.

Granada Gold Mine

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Granada Gold Mine are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Granada Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and Granada Gold

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

The idea behind Micron Technology and Granada Gold Mine 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.