Correlation Between Analog Devices and Mannatech Incorporated
Can any of the company-specific risk be diversified away by investing in both Analog Devices and Mannatech Incorporated 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 Mannatech Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Mannatech Incorporated, you can compare the effects of market volatilities on Analog Devices and Mannatech Incorporated 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 Mannatech Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Mannatech Incorporated.
Diversification Opportunities for Analog Devices and Mannatech Incorporated
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Analog and Mannatech is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Mannatech Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mannatech Incorporated 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 Mannatech Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mannatech Incorporated has no effect on the direction of Analog Devices i.e., Analog Devices and Mannatech Incorporated go up and down completely randomly.
Pair Corralation between Analog Devices and Mannatech Incorporated
Considering the 90-day investment horizon Analog Devices is expected to generate 51.06 times less return on investment than Mannatech Incorporated. But when comparing it to its historical volatility, Analog Devices is 31.03 times less risky than Mannatech Incorporated. It trades about 0.03 of its potential returns per unit of risk. Mannatech Incorporated is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,184 in Mannatech Incorporated on August 26, 2024 and sell it today you would lose (344.00) from holding Mannatech Incorporated or give up 29.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.59% |
| Values | Daily Returns |
Analog Devices vs. Mannatech Incorporated
Performance |
| Timeline |
| Analog Devices |
| Mannatech Incorporated |
Analog Devices and Mannatech Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Mannatech Incorporated
The main advantage of trading using opposite Analog Devices and Mannatech Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Mannatech Incorporated 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 Mannatech Incorporated will offset losses from the drop in Mannatech Incorporated's long position.The idea behind Analog Devices and Mannatech Incorporated 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.| Mannatech Incorporated vs. Edgewell Personal Care | Mannatech Incorporated vs. Inter Parfums | Mannatech Incorporated vs. Nu Skin Enterprises | Mannatech Incorporated vs. Helen of Troy |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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