Correlation Between Analog Devices and Live Ventures
Can any of the company-specific risk be diversified away by investing in both Analog Devices and Live Ventures 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 Live Ventures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Live Ventures, you can compare the effects of market volatilities on Analog Devices and Live Ventures 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 Live Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Live Ventures.
Diversification Opportunities for Analog Devices and Live Ventures
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Analog and Live is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Live Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Ventures 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 Live Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Ventures has no effect on the direction of Analog Devices i.e., Analog Devices and Live Ventures go up and down completely randomly.
Pair Corralation between Analog Devices and Live Ventures
Considering the 90-day investment horizon Analog Devices is expected to generate 0.58 times more return on investment than Live Ventures. However, Analog Devices is 1.72 times less risky than Live Ventures. It trades about 0.04 of its potential returns per unit of risk. Live Ventures is currently generating about -0.07 per unit of risk. If you would invest 18,580 in Analog Devices on August 28, 2024 and sell it today you would earn a total of 3,778 from holding Analog Devices or generate 20.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. Live Ventures
Performance |
| Timeline |
| Analog Devices |
| Live Ventures |
Analog Devices and Live Ventures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Live Ventures
The main advantage of trading using opposite Analog Devices and Live Ventures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Live Ventures 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 Live Ventures will offset losses from the drop in Live Ventures' long position.The idea behind Analog Devices and Live Ventures pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Live Ventures vs. Arhaus Inc | Live Ventures vs. Floor Decor Holdings | Live Ventures vs. Haverty Furniture Companies | Live Ventures vs. Kingfisher plc |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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