Correlation Between Micron Technology and Income Fund

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

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

Diversification Opportunities for Micron Technology and Income Fund

-0.07

Correlation Coefficient

Micron Technology  Income Fund

Good diversification

The 3 months correlation between Micron and Income is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Income Fund Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Fund 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 Income Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Fund Income has no effect on the direction of Micron Technology i.e., Micron Technology and Income Fund go up and down completely randomly.

Pair Corralation between Micron Technology and Income Fund

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 13.86 times more return on investment than Income Fund. However, Micron Technology is 13.86 times more volatile than Income Fund Income. It trades about 0.05 of its potential returns per unit of risk. Income Fund Income is currently generating about 0.1 per unit of risk. If you would invest  8,970  in Micron Technology on December 25, 2024 and sell it today you would earn a total of  724.00  from holding Micron Technology or generate 8.07% return on investment over 90 days.

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

Micron Technology  vs.  Income Fund Income

Micron Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Income Fund Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Income Fund Income are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Income Fund 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 Income Fund

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

The idea behind Micron Technology and Income Fund 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.