Correlation Between Analog Devices and KVH Industries
Can any of the company-specific risk be diversified away by investing in both Analog Devices and KVH 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 KVH 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 KVH Industries, you can compare the effects of market volatilities on Analog Devices and KVH 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 KVH Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and KVH Industries.
Diversification Opportunities for Analog Devices and KVH Industries
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Analog and KVH is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH 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 KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of Analog Devices i.e., Analog Devices and KVH Industries go up and down completely randomly.
Pair Corralation between Analog Devices and KVH Industries
Considering the 90-day investment horizon Analog Devices is expected to generate 0.65 times more return on investment than KVH Industries. However, Analog Devices is 1.54 times less risky than KVH Industries. It trades about 0.04 of its potential returns per unit of risk. KVH Industries is currently generating about -0.04 per unit of risk. If you would invest 17,482 in Analog Devices on August 31, 2024 and sell it today you would earn a total of 4,235 from holding Analog Devices or generate 24.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. KVH Industries
Performance |
| Timeline |
| Analog Devices |
| KVH Industries |
Analog Devices and KVH Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and KVH Industries
The main advantage of trading using opposite Analog Devices and KVH Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, KVH 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 KVH Industries will offset losses from the drop in KVH Industries' long position.| Analog Devices vs. MACOM Technology Solutions | Analog Devices vs. FormFactor | Analog Devices vs. MaxLinear | Analog Devices vs. nLIGHT Inc |
| KVH Industries vs. Telesat Corp | KVH Industries vs. Comtech Telecommunications Corp | KVH Industries vs. Knowles Cor | KVH Industries vs. Ituran Location and |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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