Correlation Between Micron Technology and SEP Acquisition

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

Diversification Opportunities for Micron Technology and SEP Acquisition

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between Micron and SEP is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and SEP Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEP Acquisition 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 SEP Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEP Acquisition Corp has no effect on the direction of Micron Technology i.e., Micron Technology and SEP Acquisition go up and down completely randomly.

Pair Corralation between Micron Technology and SEP Acquisition

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.01 times less return on investment than SEP Acquisition. But when comparing it to its historical volatility, Micron Technology is 1.94 times less risky than SEP Acquisition. It trades about 0.05 of its potential returns per unit of risk. SEP Acquisition Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,060  in SEP Acquisition Corp on September 14, 2024 and sell it today you would lose (28.00) from holding SEP Acquisition Corp or give up 2.64% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy62.08%
ValuesDaily Returns

Micron Technology  vs.  SEP Acquisition Corp

 Performance 
       Timeline  
Micron Technology 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
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 weak basic indicators, Micron Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.
SEP Acquisition Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SEP Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SEP Acquisition is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Micron Technology and SEP Acquisition Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Micron Technology and SEP Acquisition

The main advantage of trading using opposite Micron Technology and SEP Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, SEP Acquisition 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 SEP Acquisition will offset losses from the drop in SEP Acquisition's long position.
The idea behind Micron Technology and SEP Acquisition Corp 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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