Correlation Between Analog Devices and 00108WAJ9

Can any of the company-specific risk be diversified away by investing in both Analog Devices and 00108WAJ9 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 00108WAJ9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Analog Devices and AEP Texas 415, you can compare the effects of market volatilities on Analog Devices and 00108WAJ9 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 00108WAJ9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and 00108WAJ9.

Diversification Opportunities for Analog Devices and 00108WAJ9

-0.53

Correlation Coefficient

Analog Devices  00108WAJ9

Excellent diversification

The 3 months correlation between Analog and 00108WAJ9 is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and AEP Texas 415 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP Texas 415 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 00108WAJ9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEP Texas 415 has no effect on the direction of Analog Devices i.e., Analog Devices and 00108WAJ9 go up and down completely randomly.

Pair Corralation between Analog Devices and 00108WAJ9

Considering the 90-day investment horizon Analog Devices is expected to under-perform the 00108WAJ9. In addition to that, Analog Devices is 1.03 times more volatile than AEP Texas 415. It trades about -0.03 of its total potential returns per unit of risk. AEP Texas 415 is currently generating about 0.06 per unit of volatility. If you would invest  7,832  in AEP Texas 415 on December 24, 2024 and sell it today you would earn a total of  272.00  from holding AEP Texas 415 or generate 3.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	48.33%
Values	Daily Returns

Analog Devices  vs.  AEP Texas 415

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.

AEP Texas 415

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AEP Texas 415 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, 00108WAJ9 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Analog Devices and 00108WAJ9

The main advantage of trading using opposite Analog Devices and 00108WAJ9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, 00108WAJ9 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 00108WAJ9 will offset losses from the drop in 00108WAJ9's long position.

The idea behind Analog Devices and AEP Texas 415 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.