Correlation Between Analog Devices and Life Time
Can any of the company-specific risk be diversified away by investing in both Analog Devices and Life Time 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 Life Time into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Life Time Group, you can compare the effects of market volatilities on Analog Devices and Life Time 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 Life Time. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Life Time.
Diversification Opportunities for Analog Devices and Life Time
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Analog and Life is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Life Time Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Time Group 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 Life Time. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Time Group has no effect on the direction of Analog Devices i.e., Analog Devices and Life Time go up and down completely randomly.
Pair Corralation between Analog Devices and Life Time
Considering the 90-day investment horizon Analog Devices is expected to under-perform the Life Time. But the stock apears to be less risky and, when comparing its historical volatility, Analog Devices is 1.0 times less risky than Life Time. The stock trades about -0.01 of its potential returns per unit of risk. The Life Time Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,726 in Life Time Group on September 2, 2024 and sell it today you would earn a total of 701.00 from holding Life Time Group or generate 40.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. Life Time Group
Performance |
| Timeline |
| Analog Devices |
| Life Time Group |
Analog Devices and Life Time Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Life Time
The main advantage of trading using opposite Analog Devices and Life Time positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Life Time 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 Life Time will offset losses from the drop in Life Time'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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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