Correlation Between Sitime and Analog Devices
Can any of the company-specific risk be diversified away by investing in both Sitime 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 Sitime and Analog Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sitime and Analog Devices, you can compare the effects of market volatilities on Sitime 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 Sitime with a short position of Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sitime and Analog Devices.
Diversification Opportunities for Sitime and Analog Devices
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sitime and Analog is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sitime and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and Sitime 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 Sitime 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 Sitime i.e., Sitime and Analog Devices go up and down completely randomly.
Pair Corralation between Sitime and Analog Devices
Given the investment horizon of 90 days Sitime is expected to under-perform the Analog Devices. In addition to that, Sitime is 4.0 times more volatile than Analog Devices. It trades about -0.13 of its total potential returns per unit of risk. Analog Devices is currently generating about -0.14 per unit of volatility. If you would invest 22,044 in Analog Devices on November 9, 2024 and sell it today you would lose (1,261) from holding Analog Devices or give up 5.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sitime vs. Analog Devices
Performance |
| Timeline |
| Sitime |
| Analog Devices |
Sitime and Analog Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sitime and Analog Devices
The main advantage of trading using opposite Sitime and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sitime 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.| Sitime vs. Lattice Semiconductor | Sitime vs. Qorvo Inc | Sitime vs. Microchip Technology | Sitime vs. Silicon Laboratories |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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