Correlation Between Analog Devices and BOS Better

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

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

Diversification Opportunities for Analog Devices and BOS Better

-0.3

Correlation Coefficient

Analog Devices  BOS Better

Very good diversification

The 3 months correlation between Analog and BOS is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and BOS Better Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOS Better Online 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 BOS Better. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOS Better Online has no effect on the direction of Analog Devices i.e., Analog Devices and BOS Better go up and down completely randomly.

Pair Corralation between Analog Devices and BOS Better

Considering the 90-day investment horizon Analog Devices is expected to generate 3.13 times less return on investment than BOS Better. But when comparing it to its historical volatility, Analog Devices is 2.88 times less risky than BOS Better. It trades about 0.17 of its potential returns per unit of risk. BOS Better Online is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  329.00  in BOS Better Online on October 26, 2024 and sell it today you would earn a total of  47.00  from holding BOS Better Online or generate 14.29% return on investment over 90 days.

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

Analog Devices  vs.  BOS Better Online

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.

BOS Better Online

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BOS Better Online are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, BOS Better exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Analog Devices and BOS Better

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

The idea behind Analog Devices and BOS Better Online 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.