Correlation Between Analog Devices and Emerson Radio
Can any of the company-specific risk be diversified away by investing in both Analog Devices and Emerson Radio 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 Emerson Radio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Emerson Radio, you can compare the effects of market volatilities on Analog Devices and Emerson Radio 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 Emerson Radio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Emerson Radio.
Diversification Opportunities for Analog Devices and Emerson Radio
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Analog and Emerson is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio 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 Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of Analog Devices i.e., Analog Devices and Emerson Radio go up and down completely randomly.
Pair Corralation between Analog Devices and Emerson Radio
Considering the 90-day investment horizon Analog Devices is expected to generate 0.66 times more return on investment than Emerson Radio. However, Analog Devices is 1.53 times less risky than Emerson Radio. It trades about -0.16 of its potential returns per unit of risk. Emerson Radio is currently generating about -0.2 per unit of risk. If you would invest 23,523 in Analog Devices on August 30, 2024 and sell it today you would lose (1,806) from holding Analog Devices or give up 7.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. Emerson Radio
Performance |
| Timeline |
| Analog Devices |
| Emerson Radio |
Analog Devices and Emerson Radio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Emerson Radio
The main advantage of trading using opposite Analog Devices and Emerson Radio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Emerson Radio 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 Emerson Radio will offset losses from the drop in Emerson Radio's long position.| Analog Devices vs. First Solar | Analog Devices vs. Sunrun Inc | Analog Devices vs. Canadian Solar | Analog Devices vs. SolarEdge Technologies |
| Emerson Radio vs. VOXX International | Emerson Radio vs. LG Display Co | Emerson Radio vs. Vizio Holding Corp | Emerson Radio vs. Turtle Beach 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.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |