Correlation Between Micron Technology and Valens

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Can any of the company-specific risk be diversified away by investing in both Micron Technology and Valens 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 Valens into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Valens, you can compare the effects of market volatilities on Micron Technology and Valens 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 Valens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Valens.

Diversification Opportunities for Micron Technology and Valens

MicronValensDiversified AwayMicronValensDiversified Away100%
-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between Micron and Valens is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Valens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valens 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 Valens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valens has no effect on the direction of Micron Technology i.e., Micron Technology and Valens go up and down completely randomly.

Pair Corralation between Micron Technology and Valens

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 6.64 times less return on investment than Valens. But when comparing it to its historical volatility, Micron Technology is 2.61 times less risky than Valens. It trades about 0.06 of its potential returns per unit of risk. Valens is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  182.00  in Valens on September 14, 2024 and sell it today you would earn a total of  33.50  from holding Valens or generate 18.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Micron Technology  vs.  Valens

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -100102030
JavaScript chart by amCharts 3.21.15MU VLN
       Timeline  
Micron Technology 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
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 weak basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec9095100105110115
Valens 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Weak
Over the last 90 days Valens has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Valens is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1.71.81.922.12.22.32.4

Micron Technology and Valens Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.0-7.49-4.98-2.470.04382.635.267.8910.52 0.0200.0250.0300.035
JavaScript chart by amCharts 3.21.15MU VLN
       Returns  

Pair Trading with Micron Technology and Valens

The main advantage of trading using opposite Micron Technology and Valens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Valens 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 Valens will offset losses from the drop in Valens' long position.
The idea behind Micron Technology and Valens 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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