Correlation Between Analog Devices and First Republic
Can any of the company-specific risk be diversified away by investing in both Analog Devices and First Republic 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 First Republic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and First Republic Bank, you can compare the effects of market volatilities on Analog Devices and First Republic 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 First Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and First Republic.
Diversification Opportunities for Analog Devices and First Republic
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Analog and First is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and First Republic Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Republic Bank 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 First Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Republic Bank has no effect on the direction of Analog Devices i.e., Analog Devices and First Republic go up and down completely randomly.
Pair Corralation between Analog Devices and First Republic
If you would invest 21,489 in Analog Devices on October 22, 2024 and sell it today you would earn a total of 427.00 from holding Analog Devices or generate 1.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 5.26% |
| Values | Daily Returns |
Analog Devices vs. First Republic Bank
Performance |
| Timeline |
| Analog Devices |
| First Republic Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Analog Devices and First Republic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and First Republic
The main advantage of trading using opposite Analog Devices and First Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, First Republic 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 First Republic will offset losses from the drop in First Republic's long position.| Analog Devices vs. NXP Semiconductors NV | Analog Devices vs. Qualcomm Incorporated | Analog Devices vs. Broadcom | Analog Devices vs. Microchip Technology |
| First Republic vs. Topbuild Corp | First Republic vs. Primoris Services | First Republic vs. Park Ohio Holdings | First Republic vs. MYR Group |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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