Correlation Between Analog Devices and Tigo Energy

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Can any of the company-specific risk be diversified away by investing in both Analog Devices and Tigo Energy 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 Tigo Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Tigo Energy, you can compare the effects of market volatilities on Analog Devices and Tigo Energy 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 Tigo Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Tigo Energy.

Diversification Opportunities for Analog Devices and Tigo Energy

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Analog and Tigo is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Tigo Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tigo Energy 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 Tigo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tigo Energy has no effect on the direction of Analog Devices i.e., Analog Devices and Tigo Energy go up and down completely randomly.

Pair Corralation between Analog Devices and Tigo Energy

Considering the 90-day investment horizon Analog Devices is expected to generate 0.31 times more return on investment than Tigo Energy. However, Analog Devices is 3.18 times less risky than Tigo Energy. It trades about 0.04 of its potential returns per unit of risk. Tigo Energy is currently generating about 0.0 per unit of risk. If you would invest  18,517  in Analog Devices on October 6, 2024 and sell it today you would earn a total of  3,020  from holding Analog Devices or generate 16.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Analog Devices  vs.  Tigo Energy

 Performance 
       Timeline  
Analog Devices 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Tigo Energy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Tigo Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Analog Devices and Tigo Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Analog Devices and Tigo Energy

The main advantage of trading using opposite Analog Devices and Tigo Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Tigo Energy 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 Tigo Energy will offset losses from the drop in Tigo Energy's long position.
The idea behind Analog Devices and Tigo Energy 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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