Correlation Between Analog Devices and Hasbro
Can any of the company-specific risk be diversified away by investing in both Analog Devices and Hasbro 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 Hasbro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Hasbro Inc, you can compare the effects of market volatilities on Analog Devices and Hasbro 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 Hasbro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Hasbro.
Diversification Opportunities for Analog Devices and Hasbro
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Analog and Hasbro is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Hasbro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hasbro Inc 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 Hasbro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hasbro Inc has no effect on the direction of Analog Devices i.e., Analog Devices and Hasbro go up and down completely randomly.
Pair Corralation between Analog Devices and Hasbro
Considering the 90-day investment horizon Analog Devices is expected to under-perform the Hasbro. In addition to that, Analog Devices is 1.33 times more volatile than Hasbro Inc. It trades about -0.01 of its total potential returns per unit of risk. Hasbro Inc is currently generating about 0.08 per unit of volatility. If you would invest 5,623 in Hasbro Inc on September 2, 2024 and sell it today you would earn a total of 892.00 from holding Hasbro Inc or generate 15.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. Hasbro Inc
Performance |
| Timeline |
| Analog Devices |
| Hasbro Inc |
Analog Devices and Hasbro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Hasbro
The main advantage of trading using opposite Analog Devices and Hasbro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Hasbro 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 Hasbro will offset losses from the drop in Hasbro's long position.| Analog Devices vs. NXP Semiconductors NV | Analog Devices vs. Qualcomm Incorporated | Analog Devices vs. Broadcom | Analog Devices vs. Microchip Technology |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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