Correlation Between Analog Devices and Lion One
Can any of the company-specific risk be diversified away by investing in both Analog Devices and Lion One 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 Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Lion One Metals, you can compare the effects of market volatilities on Analog Devices and Lion One 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 Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Lion One.
Diversification Opportunities for Analog Devices and Lion One
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Analog and Lion is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Analog Devices i.e., Analog Devices and Lion One go up and down completely randomly.
Pair Corralation between Analog Devices and Lion One
Considering the 90-day investment horizon Analog Devices is expected to under-perform the Lion One. But the stock apears to be less risky and, when comparing its historical volatility, Analog Devices is 3.42 times less risky than Lion One. The stock trades about -0.03 of its potential returns per unit of risk. The Lion One Metals is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Lion One Metals on November 4, 2024 and sell it today you would earn a total of 8.00 from holding Lion One Metals or generate 42.11% 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. Lion One Metals
Performance |
| Timeline |
| Analog Devices |
| Lion One Metals |
Analog Devices and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Lion One
The main advantage of trading using opposite Analog Devices and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One's long position.| Analog Devices vs. First Solar | Analog Devices vs. Sunrun Inc | Analog Devices vs. Canadian Solar | Analog Devices vs. SolarEdge Technologies |
| Lion One vs. Irving Resources | Lion One vs. Headwater Gold | Lion One vs. Novo Resources Corp | Lion One vs. Snowline Gold Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
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