Correlation Between Micron Technology and Payden High

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

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

Diversification Opportunities for Micron Technology and Payden High

0.13

Correlation Coefficient

Micron Technology  Payden High

Average diversification

The 3 months correlation between Micron and Payden is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Payden High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden High Income 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 Payden High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden High Income has no effect on the direction of Micron Technology i.e., Micron Technology and Payden High go up and down completely randomly.

Pair Corralation between Micron Technology and Payden High

Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Payden High. In addition to that, Micron Technology is 18.38 times more volatile than Payden High Income. It trades about -0.01 of its total potential returns per unit of risk. Payden High Income is currently generating about 0.04 per unit of volatility. If you would invest  634.00  in Payden High Income on December 4, 2024 and sell it today you would earn a total of  1.00  from holding Payden High Income or generate 0.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Micron Technology  vs.  Payden High Income

Micron Technology

Risk-Adjusted Performance

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.

Payden High Income

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Payden High Income are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Payden High 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 Payden High

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

The idea behind Micron Technology and Payden High Income 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.