Correlation Between Micron Technology and Everspin Technologies

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

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

Diversification Opportunities for Micron Technology and Everspin Technologies

-0.8

Correlation Coefficient

Micron Technology  Everspin Technologies

Pay attention - limited upside

The 3 months correlation between Micron and Everspin is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Everspin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everspin Technologies 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 Everspin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everspin Technologies has no effect on the direction of Micron Technology i.e., Micron Technology and Everspin Technologies go up and down completely randomly.

Pair Corralation between Micron Technology and Everspin Technologies

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.98 times more return on investment than Everspin Technologies. However, Micron Technology is 1.98 times more volatile than Everspin Technologies. It trades about -0.09 of its potential returns per unit of risk. Everspin Technologies is currently generating about -0.21 per unit of risk. If you would invest  11,869  in Micron Technology on January 26, 2024 and sell it today you would lose (691.00) from holding Micron Technology or give up 5.82% of portfolio value over 90 days.

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

Micron Technology  vs.  Everspin Technologies

Micron Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 10 (%) 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.

Everspin Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everspin Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Micron Technology and Everspin Technologies

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

The idea behind Micron Technology and Everspin Technologies 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.