Correlation Between Analog Devices and OFX Group
Can any of the company-specific risk be diversified away by investing in both Analog Devices and OFX Group 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 OFX Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and OFX Group Ltd, you can compare the effects of market volatilities on Analog Devices and OFX Group 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 OFX Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and OFX Group.
Diversification Opportunities for Analog Devices and OFX Group
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Analog and OFX is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and OFX Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFX 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 OFX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFX Group has no effect on the direction of Analog Devices i.e., Analog Devices and OFX Group go up and down completely randomly.
Pair Corralation between Analog Devices and OFX Group
Considering the 90-day investment horizon Analog Devices is expected to generate 1.37 times less return on investment than OFX Group. But when comparing it to its historical volatility, Analog Devices is 2.54 times less risky than OFX Group. It trades about 0.04 of its potential returns per unit of risk. OFX Group Ltd is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 440.00 in OFX Group Ltd on October 17, 2024 and sell it today you would lose (5.00) from holding OFX Group Ltd or give up 1.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. OFX Group Ltd
Performance |
| Timeline |
| Analog Devices |
| OFX Group |
Analog Devices and OFX Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and OFX Group
The main advantage of trading using opposite Analog Devices and OFX Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, OFX Group 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 OFX Group will offset losses from the drop in OFX Group's long position.| Analog Devices vs. NXP Semiconductors NV | Analog Devices vs. Qualcomm Incorporated | Analog Devices vs. Broadcom | Analog Devices vs. Microchip Technology |
| OFX Group vs. Franklin Credit Management | OFX Group vs. IPG Photonics | OFX Group vs. Waste Management | OFX Group vs. Analog Devices |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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