Correlation Between Atlassian Plc and Micron Technology

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

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

Diversification Opportunities for Atlassian Plc and Micron Technology

0.11

Correlation Coefficient

Atlassian Plc  Micron Technology

Average diversification

The 3 months correlation between Atlassian and Micron is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Atlassian Plc and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and Atlassian Plc 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 Atlassian Plc are associated (or correlated) with Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of Atlassian Plc i.e., Atlassian Plc and Micron Technology go up and down completely randomly.

Pair Corralation between Atlassian Plc and Micron Technology

Assuming the 90 days trading horizon Atlassian Plc is expected to generate 0.94 times more return on investment than Micron Technology. However, Atlassian Plc is 1.07 times less risky than Micron Technology. It trades about 0.27 of its potential returns per unit of risk. Micron Technology is currently generating about 0.01 per unit of risk. If you would invest  4,384  in Atlassian Plc on October 6, 2024 and sell it today you would earn a total of  3,023  from holding Atlassian Plc or generate 68.96% return on investment over 90 days.

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

Atlassian Plc  vs.  Micron Technology

Atlassian Plc

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Atlassian Plc are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Atlassian Plc sustained solid returns over the last few months and may actually be approaching a breakup point.

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. Despite somewhat strong basic indicators, Micron Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Atlassian Plc and Micron Technology

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

The idea behind Atlassian Plc and Micron Technology 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.