Correlation Between Analog Devices and GSR II
Can any of the company-specific risk be diversified away by investing in both Analog Devices and GSR II 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 GSR II into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and GSR II Meteora, you can compare the effects of market volatilities on Analog Devices and GSR II 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 GSR II. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and GSR II.
Diversification Opportunities for Analog Devices and GSR II
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Analog and GSR is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and GSR II Meteora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSR II Meteora 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 GSR II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSR II Meteora has no effect on the direction of Analog Devices i.e., Analog Devices and GSR II go up and down completely randomly.
Pair Corralation between Analog Devices and GSR II
Considering the 90-day investment horizon Analog Devices is expected to generate 0.4 times more return on investment than GSR II. However, Analog Devices is 2.48 times less risky than GSR II. It trades about 0.04 of its potential returns per unit of risk. GSR II Meteora is currently generating about -0.12 per unit of risk. If you would invest 16,341 in Analog Devices on August 30, 2024 and sell it today you would earn a total of 5,376 from holding Analog Devices or generate 32.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 28.28% |
| Values | Daily Returns |
Analog Devices vs. GSR II Meteora
Performance |
| Timeline |
| Analog Devices |
| GSR II Meteora |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Analog Devices and GSR II Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and GSR II
The main advantage of trading using opposite Analog Devices and GSR II positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, GSR II 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 GSR II will offset losses from the drop in GSR II's long position.| Analog Devices vs. ABIVAX Socit Anonyme | Analog Devices vs. Morningstar Unconstrained Allocation | Analog Devices vs. SPACE | Analog Devices vs. Knife River |
| GSR II vs. Bel Fuse A | GSR II vs. Amkor Technology | GSR II vs. Analog Devices | GSR II vs. Iridium Communications |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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