Correlation Between Intel Corp and Micron Technology

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

Diversification Opportunities for Intel Corp and Micron Technology

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Intel and Micron is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Intel Corp and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and Intel Corp 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 Intel Corp 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 Intel Corp i.e., Intel Corp and Micron Technology go up and down completely randomly.

Pair Corralation between Intel Corp and Micron Technology

Given the investment horizon of 90 days Intel Corp is expected to under-perform the Micron Technology. In addition to that, Intel Corp is 1.09 times more volatile than Micron Technology. It trades about -0.09 of its total potential returns per unit of risk. Micron Technology is currently generating about 0.12 per unit of volatility. If you would invest  6,045  in Micron Technology on May 19, 2022 and sell it today you would earn a total of  341.00  from holding Micron Technology or generate 5.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Intel Corp  vs.  Micron Technology

 Performance (%) 
       Timeline  
Intel Corp 
Intel Performance
0 of 100
Over the last 90 days Intel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in September 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Intel Price Channel

Micron Technology 
Micron Performance
0 of 100
Over the last 90 days Micron Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Micron Technology is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Micron Price Channel

Intel Corp and Micron Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Intel Corp and Micron Technology

The main advantage of trading using opposite Intel Corp and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel Corp 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.

Intel Corp

Pair trading matchups for Intel Corp

The idea behind Intel Corp 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.

Micron Technology

Pair trading matchups for Micron Technology

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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