Correlation Between Micron Technology and Wescan Goldfields

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

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

Diversification Opportunities for Micron Technology and Wescan Goldfields

0.28

Correlation Coefficient

Micron Technology  Wescan Goldfields

Modest diversification

The 3 months correlation between Micron and Wescan is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Wescan Goldfields in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wescan Goldfields 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 Wescan Goldfields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wescan Goldfields has no effect on the direction of Micron Technology i.e., Micron Technology and Wescan Goldfields go up and down completely randomly.

Pair Corralation between Micron Technology and Wescan Goldfields

If you would invest  9,634  in Micron Technology on September 16, 2024 and sell it today you would earn a total of  616.00  from holding Micron Technology or generate 6.39% 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.  Wescan Goldfields

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.

Wescan Goldfields

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wescan Goldfields has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Micron Technology and Wescan Goldfields

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

The idea behind Micron Technology and Wescan Goldfields 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.