Correlation Between ARCA Gold and Analog Devices
Can any of the company-specific risk be diversified away by investing in both ARCA Gold 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 ARCA Gold and Analog Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARCA Gold BUGS and Analog Devices, you can compare the effects of market volatilities on ARCA Gold 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 ARCA Gold with a short position of Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARCA Gold and Analog Devices.
Diversification Opportunities for ARCA Gold and Analog Devices
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ARCA and Analog is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding ARCA Gold BUGS and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and ARCA Gold 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 ARCA Gold BUGS 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 ARCA Gold i.e., ARCA Gold and Analog Devices go up and down completely randomly.
Pair Corralation between ARCA Gold and Analog Devices
Assuming the 90 days trading horizon ARCA Gold is expected to generate 1.04 times less return on investment than Analog Devices. In addition to that, ARCA Gold is 1.07 times more volatile than Analog Devices. It trades about 0.04 of its total potential returns per unit of risk. Analog Devices is currently generating about 0.04 per unit of volatility. If you would invest 15,796 in Analog Devices on September 12, 2024 and sell it today you would earn a total of 5,765 from holding Analog Devices or generate 36.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
ARCA Gold BUGS vs. Analog Devices
Performance |
| Timeline |
ARCA Gold and Analog Devices Volatility Contrast
Predicted Return Density |
| Returns |
ARCA Gold BUGS
Pair trading matchups for ARCA Gold
Analog Devices
Pair trading matchups for Analog Devices
Pair Trading with ARCA Gold and Analog Devices
The main advantage of trading using opposite ARCA Gold and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARCA Gold 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.| ARCA Gold vs. Analog Devices | ARCA Gold vs. Finnair Oyj | ARCA Gold vs. Valneva SE ADR | ARCA Gold vs. Porvair plc |
| 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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