Correlation Between Micron Technology and Canopy Growth
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Canopy Growth 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 Canopy Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Canopy Growth Corp, you can compare the effects of market volatilities on Micron Technology and Canopy Growth 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 Canopy Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Canopy Growth.
Diversification Opportunities for Micron Technology and Canopy Growth
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Micron and Canopy is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Canopy Growth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canopy Growth Corp 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 Canopy Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canopy Growth Corp has no effect on the direction of Micron Technology i.e., Micron Technology and Canopy Growth go up and down completely randomly.
Pair Corralation between Micron Technology and Canopy Growth
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 0.28 times more return on investment than Canopy Growth. However, Micron Technology is 3.55 times less risky than Canopy Growth. It trades about 0.07 of its potential returns per unit of risk. Canopy Growth Corp is currently generating about 0.0 per unit of risk. If you would invest 4,942 in Micron Technology on September 14, 2024 and sell it today you would earn a total of 5,175 from holding Micron Technology or generate 104.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Micron Technology vs. Canopy Growth Corp
Performance |
| Timeline |
| Micron Technology |
| Canopy Growth Corp |
Micron Technology and Canopy Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Canopy Growth
The main advantage of trading using opposite Micron Technology and Canopy Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Canopy Growth 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 Canopy Growth will offset losses from the drop in Canopy Growth's long position.| Micron Technology vs. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
| Canopy Growth vs. Micron Technology | Canopy Growth vs. Sweetgreen | Canopy Growth vs. Ark Restaurants Corp | Canopy Growth vs. STMicroelectronics NV ADR |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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