Correlation Between Analog Devices and Air Products
Can any of the company-specific risk be diversified away by investing in both Analog Devices and Air Products 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 Analog Devices and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Air Products and, you can compare the effects of market volatilities on Analog Devices and Air Products 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 Analog Devices with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Air Products.
Diversification Opportunities for Analog Devices and Air Products
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Analog and Air is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products and Analog Devices 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 Analog Devices are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products has no effect on the direction of Analog Devices i.e., Analog Devices and Air Products go up and down completely randomly.
Pair Corralation between Analog Devices and Air Products
Considering the 90-day investment horizon Analog Devices is expected to generate 1.06 times more return on investment than Air Products. However, Analog Devices is 1.06 times more volatile than Air Products and. It trades about 0.03 of its potential returns per unit of risk. Air Products and is currently generating about 0.02 per unit of risk. If you would invest 18,468 in Analog Devices on September 12, 2024 and sell it today you would earn a total of 3,093 from holding Analog Devices or generate 16.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. Air Products and
Performance |
| Timeline |
| Analog Devices |
| Air Products |
Analog Devices and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Air Products
The main advantage of trading using opposite Analog Devices and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Analog Devices vs. NXP Semiconductors NV | Analog Devices vs. Qualcomm Incorporated | Analog Devices vs. Broadcom | Analog Devices vs. Microchip Technology |
| Air Products vs. Griffon | Air Products vs. Merck Company | Air Products vs. Brinker International | Air Products vs. Alcoa Corp |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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