Correlation Between Analog Devices and SmartStop Self

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

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

Diversification Opportunities for Analog Devices and SmartStop Self

0.05

Correlation Coefficient

Analog Devices  SmartStop Self

Significant diversification

The 3 months correlation between Analog and SmartStop is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and SmartStop Self Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartStop Self Storage 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 SmartStop Self. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartStop Self Storage has no effect on the direction of Analog Devices i.e., Analog Devices and SmartStop Self go up and down completely randomly.

Pair Corralation between Analog Devices and SmartStop Self

Considering the 90-day investment horizon Analog Devices is expected to under-perform the SmartStop Self. But the stock apears to be less risky and, when comparing its historical volatility, Analog Devices is 92.73 times less risky than SmartStop Self. The stock trades about -0.02 of its potential returns per unit of risk. The SmartStop Self Storage is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,560  in SmartStop Self Storage on December 30, 2024 and sell it today you would lose (244.00) from holding SmartStop Self Storage or give up 6.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Analog Devices  vs.  SmartStop Self Storage

Analog Devices

Risk-Adjusted Performance

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.

SmartStop Self Storage

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SmartStop Self Storage are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, SmartStop Self reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Analog Devices and SmartStop Self

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

The idea behind Analog Devices and SmartStop Self Storage 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.