Correlation Between Analog Devices and Brinks

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

By analyzing existing cross correlation between Analog Devices and Brinks Co 4625, you can compare the effects of market volatilities on Analog Devices and Brinks 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 Brinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Brinks.

Diversification Opportunities for Analog Devices and Brinks

0.04

Correlation Coefficient

Analog Devices  Brinks

Significant diversification

The 3 months correlation between Analog and Brinks is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Brinks Co 4625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinks Co 4625 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 Brinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinks Co 4625 has no effect on the direction of Analog Devices i.e., Analog Devices and Brinks go up and down completely randomly.

Pair Corralation between Analog Devices and Brinks

Considering the 90-day investment horizon Analog Devices is expected to generate 1.45 times more return on investment than Brinks. However, Analog Devices is 1.45 times more volatile than Brinks Co 4625. It trades about 0.01 of its potential returns per unit of risk. Brinks Co 4625 is currently generating about -0.09 per unit of risk. If you would invest  22,917  in Analog Devices on October 27, 2024 and sell it today you would lose (82.00) from holding Analog Devices or give up 0.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Analog Devices  vs.  Brinks Co 4625

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 latest stock price confusion, may contribute to short-horizon losses for the traders.

Brinks Co 4625

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brinks Co 4625 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Brinks Co 4625 investors.

Pair Trading with Analog Devices and Brinks

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

The idea behind Analog Devices and Brinks Co 4625 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.