Correlation Between GameStop Corp and Micron Technology

Can any of the company-specific risk be diversified away by investing in both GameStop 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 GameStop 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 GameStop Corp and Micron Technology, you can compare the effects of market volatilities on GameStop 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 GameStop Corp with a short position of Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and Micron Technology.

Diversification Opportunities for GameStop Corp and Micron Technology

-0.58

Correlation Coefficient

GameStop Corp  Micron Technology

Excellent diversification

The 3 months correlation between GameStop and Micron is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology and GameStop 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 GameStop 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 GameStop Corp i.e., GameStop Corp and Micron Technology go up and down completely randomly.

Pair Corralation between GameStop Corp and Micron Technology

Assuming the 90 days trading horizon GameStop Corp is expected to under-perform the Micron Technology. In addition to that, GameStop Corp is 1.58 times more volatile than Micron Technology. It trades about -0.04 of its total potential returns per unit of risk. Micron Technology is currently generating about 0.32 per unit of volatility. If you would invest  137,807  in Micron Technology on April 16, 2025 and sell it today you would earn a total of  84,685  from holding Micron Technology or generate 61.45% return on investment over 90 days.

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

GameStop Corp  vs.  Micron Technology

GameStop Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days GameStop Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Micron Technology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Micron Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GameStop Corp and Micron Technology

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

The idea behind GameStop 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .