Correlation Between Micron Technology and Multi Index

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

By analyzing existing cross correlation between Micron Technology and Multi Index 2025 Lifetime, you can compare the effects of market volatilities on Micron Technology and Multi Index 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 Multi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Multi Index.

Diversification Opportunities for Micron Technology and Multi Index

0.01

Correlation Coefficient

Micron Technology  Multi Index

Significant diversification

The 3 months correlation between Micron and Multi is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Multi Index 2025 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2025 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 Multi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2025 has no effect on the direction of Micron Technology i.e., Micron Technology and Multi Index go up and down completely randomly.

Pair Corralation between Micron Technology and Multi Index

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 10.42 times more return on investment than Multi Index. However, Micron Technology is 10.42 times more volatile than Multi Index 2025 Lifetime. It trades about 0.2 of its potential returns per unit of risk. Multi Index 2025 Lifetime is currently generating about 0.12 per unit of risk. If you would invest  9,751  in Micron Technology on September 19, 2024 and sell it today you would earn a total of  1,109  from holding Micron Technology or generate 11.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Micron Technology  vs.  Multi Index 2025 Lifetime

Micron Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 8 (%) 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.

Multi Index 2025

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Multi Index 2025 Lifetime has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Multi Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Micron Technology and Multi Index

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

The idea behind Micron Technology and Multi Index 2025 Lifetime 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.