Correlation Between Analog Devices and Sea
Can any of the company-specific risk be diversified away by investing in both Analog Devices and Sea 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 Sea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Sea, you can compare the effects of market volatilities on Analog Devices and Sea 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 Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Sea.
Diversification Opportunities for Analog Devices and Sea
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Analog and Sea is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea 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 Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea has no effect on the direction of Analog Devices i.e., Analog Devices and Sea go up and down completely randomly.
Pair Corralation between Analog Devices and Sea
Considering the 90-day investment horizon Analog Devices is expected to under-perform the Sea. But the stock apears to be less risky and, when comparing its historical volatility, Analog Devices is 1.58 times less risky than Sea. The stock trades about -0.05 of its potential returns per unit of risk. The Sea is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 9,405 in Sea on September 1, 2024 and sell it today you would earn a total of 1,975 from holding Sea or generate 21.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. Sea
Performance |
| Timeline |
| Analog Devices |
| Sea |
Analog Devices and Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Sea
The main advantage of trading using opposite Analog Devices and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Sea 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 Sea will offset losses from the drop in Sea's long position.| Analog Devices vs. NXP Semiconductors NV | Analog Devices vs. GSI Technology | Analog Devices vs. MaxLinear | Analog Devices vs. Texas Instruments Incorporated |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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