Correlation Between Micron Technology and Advanced Micro

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

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

Diversification Opportunities for Micron Technology and Advanced Micro

0.85

Correlation Coefficient

Micron Technology  Advanced Micro

Very poor diversification

The 3 months correlation between Micron and Advanced is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices 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 Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of Micron Technology i.e., Micron Technology and Advanced Micro go up and down completely randomly.

Pair Corralation between Micron Technology and Advanced Micro

Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.51 times less return on investment than Advanced Micro. In addition to that, Micron Technology is 1.09 times more volatile than Advanced Micro Devices. It trades about 0.04 of its total potential returns per unit of risk. Advanced Micro Devices is currently generating about 0.06 per unit of volatility. If you would invest  9,823  in Advanced Micro Devices on March 3, 2025 and sell it today you would earn a total of  1,250  from holding Advanced Micro Devices or generate 12.73% return on investment over 90 days.

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

Micron Technology  vs.  Advanced Micro Devices

Micron Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Micron Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Micron Technology may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Advanced Micro Devices

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Micro Devices are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating primary indicators, Advanced Micro exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micron Technology and Advanced Micro

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

The idea behind Micron Technology and Advanced Micro Devices 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.