Correlation Between Analog Devices and Ardelyx

Can any of the company-specific risk be diversified away by investing in both Analog Devices and Ardelyx 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 Analog Devices and Ardelyx into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Analog Devices and Ardelyx, you can compare the effects of market volatilities on Analog Devices and Ardelyx 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 Analog Devices with a short position of Ardelyx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Ardelyx.

Diversification Opportunities for Analog Devices and Ardelyx

0.76

Correlation Coefficient

Analog Devices  Ardelyx

Poor diversification

The 3 months correlation between Analog and Ardelyx is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Ardelyx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardelyx and Analog Devices 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 Analog Devices are associated (or correlated) with Ardelyx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardelyx has no effect on the direction of Analog Devices i.e., Analog Devices and Ardelyx go up and down completely randomly.

Pair Corralation between Analog Devices and Ardelyx

Considering the 90-day investment horizon Analog Devices is expected to generate 4.2 times less return on investment than Ardelyx. But when comparing it to its historical volatility, Analog Devices is 3.37 times less risky than Ardelyx. It trades about 0.03 of its potential returns per unit of risk. Ardelyx is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  527.00  in Ardelyx on October 10, 2024 and sell it today you would earn a total of  7.00  from holding Ardelyx or generate 1.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Analog Devices  vs.  Ardelyx

Analog Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Analog Devices has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Analog Devices is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Ardelyx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardelyx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Ardelyx is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Analog Devices and Ardelyx

The main advantage of trading using opposite Analog Devices and Ardelyx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Ardelyx 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 Ardelyx will offset losses from the drop in Ardelyx's long position.

The idea behind Analog Devices and Ardelyx pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.