Correlation Between Silicon Laboratories and Analog Devices
Can any of the company-specific risk be diversified away by investing in both Silicon Laboratories 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 Silicon Laboratories and Analog Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silicon Laboratories and Analog Devices, you can compare the effects of market volatilities on Silicon Laboratories 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 Silicon Laboratories with a short position of Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Laboratories and Analog Devices.
Diversification Opportunities for Silicon Laboratories and Analog Devices
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Silicon and Analog is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Laboratories and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and Silicon Laboratories 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 Silicon Laboratories 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 Silicon Laboratories i.e., Silicon Laboratories and Analog Devices go up and down completely randomly.
Pair Corralation between Silicon Laboratories and Analog Devices
Given the investment horizon of 90 days Silicon Laboratories is expected to generate 1.83 times more return on investment than Analog Devices. However, Silicon Laboratories is 1.83 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 -0.05 per unit of risk. If you would invest 11,511 in Silicon Laboratories on August 28, 2024 and sell it today you would lose (305.00) from holding Silicon Laboratories or give up 2.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Laboratories vs. Analog Devices
Performance |
| Timeline |
| Silicon Laboratories |
| Analog Devices |
Silicon Laboratories and Analog Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Laboratories and Analog Devices
The main advantage of trading using opposite Silicon Laboratories and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Laboratories 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.| Silicon Laboratories vs. Diodes Incorporated | Silicon Laboratories vs. MACOM Technology Solutions | Silicon Laboratories vs. FormFactor | Silicon Laboratories vs. Amkor 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 Stocks Directory module to find actively traded stocks across global markets.
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