Correlation Between Micron Technology and Pagaya Technologies

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

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

Diversification Opportunities for Micron Technology and Pagaya Technologies

-0.06

Correlation Coefficient

Micron Technology  Pagaya Technologies

Good diversification

The 3 months correlation between Micron and Pagaya is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Pagaya Technologies Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pagaya Technologies 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 Pagaya Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pagaya Technologies has no effect on the direction of Micron Technology i.e., Micron Technology and Pagaya Technologies go up and down completely randomly.

Pair Corralation between Micron Technology and Pagaya Technologies

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Pagaya Technologies. In addition to that, Micron Technology is 278.22 times more volatile than Pagaya Technologies Ltd. It trades about -0.09 of its total potential returns per unit of risk. Pagaya Technologies Ltd is currently generating about 0.22 per unit of volatility. If you would invest  23.00  in Pagaya Technologies Ltd on September 13, 2024 and sell it today you would earn a total of  0.01  from holding Pagaya Technologies Ltd or generate 0.04% 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.  Pagaya Technologies Ltd

Micron Technology

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Micron Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pagaya Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pagaya Technologies Ltd are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Pagaya Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and Pagaya Technologies

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

The idea behind Micron Technology and Pagaya Technologies Ltd 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.