Correlation Between Analog Devices and Sumitomo Electric
Can any of the company-specific risk be diversified away by investing in both Analog Devices and Sumitomo Electric 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 Sumitomo Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Sumitomo Electric Industries, you can compare the effects of market volatilities on Analog Devices and Sumitomo Electric 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 Sumitomo Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Sumitomo Electric.
Diversification Opportunities for Analog Devices and Sumitomo Electric
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Analog and Sumitomo is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Sumitomo Electric Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Electric 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 Sumitomo Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Electric has no effect on the direction of Analog Devices i.e., Analog Devices and Sumitomo Electric go up and down completely randomly.
Pair Corralation between Analog Devices and Sumitomo Electric
Considering the 90-day investment horizon Analog Devices is expected to generate 1.54 times less return on investment than Sumitomo Electric. In addition to that, Analog Devices is 1.62 times more volatile than Sumitomo Electric Industries. It trades about 0.04 of its total potential returns per unit of risk. Sumitomo Electric Industries is currently generating about 0.11 per unit of volatility. If you would invest 1,146 in Sumitomo Electric Industries on August 30, 2024 and sell it today you would earn a total of 511.00 from holding Sumitomo Electric Industries or generate 44.59% 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. Sumitomo Electric Industries
Performance |
| Timeline |
| Analog Devices |
| Sumitomo Electric |
Analog Devices and Sumitomo Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Sumitomo Electric
The main advantage of trading using opposite Analog Devices and Sumitomo Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Sumitomo Electric 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 Sumitomo Electric will offset losses from the drop in Sumitomo Electric's long position.| Analog Devices vs. ABIVAX Socit Anonyme | Analog Devices vs. Morningstar Unconstrained Allocation | Analog Devices vs. SPACE | Analog Devices vs. Knife River |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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