Correlation Between Micron Technology and Leland Thomson

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

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

Diversification Opportunities for Micron Technology and Leland Thomson

-0.2

Correlation Coefficient

Micron Technology  Leland Thomson

Good diversification

The 3 months correlation between Micron and Leland is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Leland Thomson Reuters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leland Thomson Reuters 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 Leland Thomson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leland Thomson Reuters has no effect on the direction of Micron Technology i.e., Micron Technology and Leland Thomson go up and down completely randomly.

Pair Corralation between Micron Technology and Leland Thomson

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 2.77 times more return on investment than Leland Thomson. However, Micron Technology is 2.77 times more volatile than Leland Thomson Reuters. It trades about -0.08 of its potential returns per unit of risk. Leland Thomson Reuters is currently generating about -0.27 per unit of risk. If you would invest  10,812  in Micron Technology on October 17, 2024 and sell it today you would lose (1,076) from holding Micron Technology or give up 9.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Micron Technology  vs.  Leland Thomson Reuters

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.

Leland Thomson Reuters

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Leland Thomson Reuters are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Leland Thomson 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 Leland Thomson

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

The idea behind Micron Technology and Leland Thomson Reuters 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.