Correlation Between Micron Technology and Templeton Global

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

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

Diversification Opportunities for Micron Technology and Templeton Global

0.68

Correlation Coefficient

Micron Technology  Templeton Global

Poor diversification

The 3 months correlation between Micron and Templeton is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Templeton Global AD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Global 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 Templeton Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Global has no effect on the direction of Micron Technology i.e., Micron Technology and Templeton Global go up and down completely randomly.

Pair Corralation between Micron Technology and Templeton Global

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 2.8 times more return on investment than Templeton Global. However, Micron Technology is 2.8 times more volatile than Templeton Global AD. It trades about 0.04 of its potential returns per unit of risk. Templeton Global AD is currently generating about -0.01 per unit of risk. If you would invest  6,314  in Micron Technology on October 3, 2024 and sell it today you would earn a total of  2,102  from holding Micron Technology or generate 33.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	58.56%
Values	Daily Returns

Micron Technology  vs.  Templeton Global AD

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Templeton Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Templeton Global AD has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Micron Technology and Templeton Global

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

The idea behind Micron Technology and Templeton Global AD 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.