Correlation Between Air Products and Analog Devices
Can any of the company-specific risk be diversified away by investing in both Air Products and Analog Devices 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 Air Products and Analog Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products and and Analog Devices, you can compare the effects of market volatilities on Air Products and Analog Devices 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 Air Products with a short position of Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Analog Devices.
Diversification Opportunities for Air Products and Analog Devices
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Analog is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and Air Products 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 Air Products and are associated (or correlated) with Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of Air Products i.e., Air Products and Analog Devices go up and down completely randomly.
Pair Corralation between Air Products and Analog Devices
Considering the 90-day investment horizon Air Products is expected to generate 1.61 times less return on investment than Analog Devices. But when comparing it to its historical volatility, Air Products and is 1.06 times less risky than Analog Devices. It trades about 0.02 of its potential returns per unit of risk. Analog Devices is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 18,468 in Analog Devices on September 12, 2024 and sell it today you would earn a total of 3,093 from holding Analog Devices or generate 16.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. Analog Devices
Performance |
| Timeline |
| Air Products |
| Analog Devices |
Air Products and Analog Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Analog Devices
The main advantage of trading using opposite Air Products and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Analog Devices 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 Analog Devices will offset losses from the drop in Analog Devices' long position.| Air Products vs. Griffon | Air Products vs. Merck Company | Air Products vs. Brinker International | Air Products vs. Alcoa Corp |
| Analog Devices vs. NXP Semiconductors NV | Analog Devices vs. Qualcomm Incorporated | Analog Devices vs. Broadcom | Analog Devices vs. Microchip 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |