Correlation Between Analog Devices and FTAI Aviation
Can any of the company-specific risk be diversified away by investing in both Analog Devices and FTAI Aviation 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 FTAI Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and FTAI Aviation Ltd, you can compare the effects of market volatilities on Analog Devices and FTAI Aviation 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 FTAI Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and FTAI Aviation.
Diversification Opportunities for Analog Devices and FTAI Aviation
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Analog and FTAI is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and FTAI Aviation Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Aviation 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 FTAI Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAI Aviation has no effect on the direction of Analog Devices i.e., Analog Devices and FTAI Aviation go up and down completely randomly.
Pair Corralation between Analog Devices and FTAI Aviation
Considering the 90-day investment horizon Analog Devices is expected to generate 1.43 times more return on investment than FTAI Aviation. However, Analog Devices is 1.43 times more volatile than FTAI Aviation Ltd. It trades about 0.04 of its potential returns per unit of risk. FTAI Aviation Ltd is currently generating about 0.05 per unit of risk. If you would invest 16,131 in Analog Devices on August 27, 2024 and sell it today you would earn a total of 5,328 from holding Analog Devices or generate 33.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 87.3% |
| Values | Daily Returns |
Analog Devices vs. FTAI Aviation Ltd
Performance |
| Timeline |
| Analog Devices |
| FTAI Aviation |
Analog Devices and FTAI Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and FTAI Aviation
The main advantage of trading using opposite Analog Devices and FTAI Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, FTAI Aviation 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 FTAI Aviation will offset losses from the drop in FTAI Aviation's long position.| Analog Devices vs. NXP Semiconductors NV | Analog Devices vs. Qualcomm Incorporated | Analog Devices vs. Broadcom | Analog Devices vs. Microchip Technology |
| FTAI Aviation vs. Ryder System | FTAI Aviation vs. Air Lease | FTAI Aviation vs. Vestis | FTAI Aviation vs. Willis Lease Finance |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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