Correlation Between Analog Devices and Chart Industries
Can any of the company-specific risk be diversified away by investing in both Analog Devices and Chart Industries 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 Chart Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Chart Industries, you can compare the effects of market volatilities on Analog Devices and Chart Industries 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 Chart Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Chart Industries.
Diversification Opportunities for Analog Devices and Chart Industries
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Analog and Chart is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Chart Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chart Industries 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 Chart Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chart Industries has no effect on the direction of Analog Devices i.e., Analog Devices and Chart Industries go up and down completely randomly.
Pair Corralation between Analog Devices and Chart Industries
Considering the 90-day investment horizon Analog Devices is expected to generate 2.32 times less return on investment than Chart Industries. But when comparing it to its historical volatility, Analog Devices is 1.88 times less risky than Chart Industries. It trades about 0.04 of its potential returns per unit of risk. Chart Industries is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 12,056 in Chart Industries on September 3, 2024 and sell it today you would earn a total of 7,269 from holding Chart Industries or generate 60.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. Chart Industries
Performance |
| Timeline |
| Analog Devices |
| Chart Industries |
Analog Devices and Chart Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Chart Industries
The main advantage of trading using opposite Analog Devices and Chart Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Chart Industries 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 Chart Industries will offset losses from the drop in Chart Industries' long position.| Analog Devices vs. Silicon Motion Technology | Analog Devices vs. ASE Industrial Holding | Analog Devices vs. SemiLEDS | Analog Devices vs. Advanced Micro Devices |
| Chart Industries vs. Crane NXT Co | Chart Industries vs. Donaldson | Chart Industries vs. ITT Inc | Chart Industries vs. Franklin Electric Co |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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