The Most Underrated Stock Market Sector
Investors,
In June 2022, I published a study highlighting the intense correlation between Bitcoin and the semiconductor stock Micron Technologies ($MU). At the time, it was the strongest & the longest correlation that I had found between BTC and any stock.
Today, that correlation is just as strong as it has ever been:
🟠 Bitcoin $BTC
⚫ Micron $MU
In the lower-bound, I’ve added the 52-week correlation coefficient in order to quantify the 1-year correlation between both assets, which is currently sitting at 89%.
In past bull markets, the 1-year correlation typically fluctuates between 78% and 94%.
So why is this correlation important?
Three reasons:
Micron’s stock price can validate & confirm the bullish dynamics that we’re seeing in the Bitcoin market, verifying that we are indeed in a bull market.
Micron’s stock can be used to hedge against BTC exposure, where an investor who doesn’t want to sell their BTC but wants to reduce their risk could open a short position against MU. Because these assets have a strong correlation, the investor would retain their full BTC position during a downtrend, but reduce their net downside because they are profiting from a short position in MU.
For TradFi investors who aren’t interested in buying Bitcoin as a self-sovereign monetary instrument, but simply want a way to access correlated exposure, MU is arguably the best possible way to do that. Yes, even better than the ETFs. Many investors might not understand the value of Bitcoin and have zero interest in owning any form of direct BTC exposure. However, MU is a powerhouse semiconductor company founded in 1978, with a team of 40,000 employees, and over $5.82Bn in revenue and $793M in net income for their latest quarter. This is a real company, with a proven track record, operating in the hottest industry in the market, and it matches Bitcoin’s directional movement with 89% accuracy.
Therefore, regardless of whether you own Micron stock or not, this is a powerful relationship that you can track (and potentially use to your advantage) in the future.
In the remainder of this report, exclusive to premium member of Cubic Analytics on Substack, I’ll cover the key dynamics taking place within the stock market and conduct a deep-dive on the most underrated sector in the stock market.
This sector is outperforming the S&P 500 with lower volatility, and it’s not tech…
In fact, it’s actually outperforming tech!
I’ll also share an update on my long-term portfolio and discuss some of the strategic changes that I’m going to implement going forward, providing transparent analysis of my performance and which particular stocks I’m going to emphasize buying.
Let’s begin.
S&P 500 Under-The-Hood Metrics:
As always, I love to kick things off with these market internals.
Not only do they help me to check the pulse on the market, but it also helps to inspire how the rest of this report will go. As of Friday’s close, here’s what I’m seeing: