Correlation Between Analog Devices and Silicon Laboratories
Can any of the company-specific risk be diversified away by investing in both Analog Devices and Silicon Laboratories 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 Silicon Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Silicon Laboratories, you can compare the effects of market volatilities on Analog Devices and Silicon Laboratories 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 Silicon Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Silicon Laboratories.
Diversification Opportunities for Analog Devices and Silicon Laboratories
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Analog and Silicon is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Silicon Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Laboratories 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 Silicon Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Laboratories has no effect on the direction of Analog Devices i.e., Analog Devices and Silicon Laboratories go up and down completely randomly.
Pair Corralation between Analog Devices and Silicon Laboratories
Considering the 90-day investment horizon Analog Devices is expected to generate 0.67 times more return on investment than Silicon Laboratories. However, Analog Devices is 1.49 times less risky than Silicon Laboratories. It trades about 0.03 of its potential returns per unit of risk. Silicon Laboratories is currently generating about 0.0 per unit of risk. If you would invest 17,940 in Analog Devices on November 9, 2024 and sell it today you would earn a total of 2,843 from holding Analog Devices or generate 15.85% 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. Silicon Laboratories
Performance |
| Timeline |
| Analog Devices |
| Silicon Laboratories |
Analog Devices and Silicon Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Silicon Laboratories
The main advantage of trading using opposite Analog Devices and Silicon Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Silicon Laboratories 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 Silicon Laboratories will offset losses from the drop in Silicon Laboratories' long position.| Analog Devices vs. NXP Semiconductors NV | Analog Devices vs. Qualcomm Incorporated | Analog Devices vs. Broadcom | Analog Devices vs. Microchip Technology |
| Silicon Laboratories vs. Diodes Incorporated | Silicon Laboratories vs. MACOM Technology Solutions | Silicon Laboratories vs. FormFactor | Silicon Laboratories vs. Amkor 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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