Correlation Between Micron Technology and Pinetree Capital

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

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

Diversification Opportunities for Micron Technology and Pinetree Capital

-0.46

Correlation Coefficient

Micron Technology  Pinetree Capital

Very good diversification

The 3 months correlation between Micron and Pinetree is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Pinetree Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinetree Capital 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 Pinetree Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinetree Capital has no effect on the direction of Micron Technology i.e., Micron Technology and Pinetree Capital go up and down completely randomly.

Pair Corralation between Micron Technology and Pinetree Capital

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Pinetree Capital. In addition to that, Micron Technology is 1.04 times more volatile than Pinetree Capital. It trades about -0.06 of its total potential returns per unit of risk. Pinetree Capital is currently generating about 0.14 per unit of volatility. If you would invest  705.00  in Pinetree Capital on October 7, 2024 and sell it today you would earn a total of  504.00  from holding Pinetree Capital or generate 71.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Micron Technology  vs.  Pinetree Capital

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.

Pinetree Capital

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pinetree Capital are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Pinetree Capital displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and Pinetree Capital

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

The idea behind Micron Technology and Pinetree Capital 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.