Correlation Between ECD Automotive and Analog Devices
Can any of the company-specific risk be diversified away by investing in both ECD Automotive 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 ECD Automotive and Analog Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECD Automotive Design and Analog Devices, you can compare the effects of market volatilities on ECD Automotive 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 ECD Automotive with a short position of Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECD Automotive and Analog Devices.
Diversification Opportunities for ECD Automotive and Analog Devices
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ECD and Analog is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding ECD Automotive Design and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and ECD Automotive 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 ECD Automotive Design 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 ECD Automotive i.e., ECD Automotive and Analog Devices go up and down completely randomly.
Pair Corralation between ECD Automotive and Analog Devices
Given the investment horizon of 90 days ECD Automotive Design is expected to generate 2.72 times more return on investment than Analog Devices. However, ECD Automotive is 2.72 times more volatile than Analog Devices. It trades about 0.01 of its potential returns per unit of risk. Analog Devices is currently generating about -0.02 per unit of risk. If you would invest 111.00 in ECD Automotive Design on September 3, 2024 and sell it today you would lose (13.00) from holding ECD Automotive Design or give up 11.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECD Automotive Design vs. Analog Devices
Performance |
| Timeline |
| ECD Automotive Design |
| Analog Devices |
ECD Automotive and Analog Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECD Automotive and Analog Devices
The main advantage of trading using opposite ECD Automotive and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECD Automotive 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.| ECD Automotive vs. GreenPower Motor | ECD Automotive vs. ZEEKR Intelligent Technology | ECD Automotive vs. Volcon Inc | ECD Automotive vs. Ford Motor |
| Analog Devices vs. Silicon Motion Technology | Analog Devices vs. ASE Industrial Holding | Analog Devices vs. SemiLEDS | Analog Devices vs. Advanced Micro 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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