Correlation Between Analog Devices and Kopin
Can any of the company-specific risk be diversified away by investing in both Analog Devices and Kopin 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 Kopin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Kopin, you can compare the effects of market volatilities on Analog Devices and Kopin 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 Kopin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Kopin.
Diversification Opportunities for Analog Devices and Kopin
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Analog and Kopin is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Kopin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kopin 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 Kopin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kopin has no effect on the direction of Analog Devices i.e., Analog Devices and Kopin go up and down completely randomly.
Pair Corralation between Analog Devices and Kopin
Considering the 90-day investment horizon Analog Devices is expected to under-perform the Kopin. But the stock apears to be less risky and, when comparing its historical volatility, Analog Devices is 3.03 times less risky than Kopin. The stock trades about -0.01 of its potential returns per unit of risk. The Kopin is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 79.00 in Kopin on September 2, 2024 and sell it today you would earn a total of 39.00 from holding Kopin or generate 49.37% 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. Kopin
Performance |
| Timeline |
| Analog Devices |
| Kopin |
Analog Devices and Kopin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Kopin
The main advantage of trading using opposite Analog Devices and Kopin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Kopin 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 Kopin will offset losses from the drop in Kopin's long position.| Analog Devices vs. NXP Semiconductors NV | Analog Devices vs. Qualcomm Incorporated | Analog Devices vs. Broadcom | Analog Devices vs. Microchip Technology |
| Kopin vs. Universal Display | Kopin vs. Daktronics | Kopin vs. KULR Technology Group | Kopin vs. LightPath Technologies |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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