Correlation Between Micron Technology and Short Nasdaq-100

Can any of the company-specific risk be diversified away by investing in both Micron Technology and Short Nasdaq-100 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 Short Nasdaq-100 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Micron Technology and Short Nasdaq 100 Profund, you can compare the effects of market volatilities on Micron Technology and Short Nasdaq-100 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 Short Nasdaq-100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Short Nasdaq-100.

Diversification Opportunities for Micron Technology and Short Nasdaq-100

-0.3

Correlation Coefficient

Micron Technology  Short Nasdaq-100

Very good diversification

The 3 months correlation between Micron and Short is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Short Nasdaq 100 Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Nasdaq 100 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 Short Nasdaq-100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Nasdaq 100 has no effect on the direction of Micron Technology i.e., Micron Technology and Short Nasdaq-100 go up and down completely randomly.

Pair Corralation between Micron Technology and Short Nasdaq-100

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 3.22 times more return on investment than Short Nasdaq-100. However, Micron Technology is 3.22 times more volatile than Short Nasdaq 100 Profund. It trades about 0.01 of its potential returns per unit of risk. Short Nasdaq 100 Profund is currently generating about 0.01 per unit of risk. If you would invest  9,043  in Micron Technology on December 10, 2024 and sell it today you would lose (335.00) from holding Micron Technology or give up 3.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Micron Technology  vs.  Short Nasdaq 100 Profund

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 comparatively stable basic indicators, Micron Technology is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Short Nasdaq 100

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Short Nasdaq 100 Profund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Short Nasdaq-100 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Micron Technology and Short Nasdaq-100

The main advantage of trading using opposite Micron Technology and Short Nasdaq-100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Short Nasdaq-100 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 Short Nasdaq-100 will offset losses from the drop in Short Nasdaq-100's long position.

The idea behind Micron Technology and Short Nasdaq 100 Profund 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.