Correlation Between Micron Technology and ProShares Short

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

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

Diversification Opportunities for Micron Technology and ProShares Short

0.31

Correlation Coefficient

Micron Technology  ProShares Short

Weak diversification

The 3 months correlation between Micron and ProShares is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and ProShares Short Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short Real 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 ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short Real has no effect on the direction of Micron Technology i.e., Micron Technology and ProShares Short go up and down completely randomly.

Pair Corralation between Micron Technology and ProShares Short

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 3.41 times more return on investment than ProShares Short. However, Micron Technology is 3.41 times more volatile than ProShares Short Real. It trades about 0.1 of its potential returns per unit of risk. ProShares Short Real is currently generating about 0.11 per unit of risk. If you would invest  8,708  in Micron Technology on September 16, 2024 and sell it today you would earn a total of  1,542  from holding Micron Technology or generate 17.71% return on investment over 90 days.

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

Micron Technology  vs.  ProShares Short Real

Micron Technology

Risk-Adjusted Performance

7 of 100

OK

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

ProShares Short Real

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Short Real are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, ProShares Short may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Micron Technology and ProShares Short

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

The idea behind Micron Technology and ProShares Short Real 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.