Correlation Between Analog Devices and Weebit Nano

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

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

Diversification Opportunities for Analog Devices and Weebit Nano

-0.84

Correlation Coefficient

Analog Devices  Weebit Nano

Pay attention - limited upside

The 3 months correlation between Analog and Weebit is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Weebit Nano Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weebit Nano Limited 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 Weebit Nano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weebit Nano Limited has no effect on the direction of Analog Devices i.e., Analog Devices and Weebit Nano go up and down completely randomly.

Pair Corralation between Analog Devices and Weebit Nano

Considering the 90-day investment horizon Analog Devices is expected to generate 0.25 times more return on investment than Weebit Nano. However, Analog Devices is 4.04 times less risky than Weebit Nano. It trades about 0.08 of its potential returns per unit of risk. Weebit Nano Limited is currently generating about -0.06 per unit of risk. If you would invest  20,877  in Analog Devices on September 19, 2024 and sell it today you would earn a total of  505.00  from holding Analog Devices or generate 2.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Analog Devices  vs.  Weebit Nano Limited

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 latest weak performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Weebit Nano Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Weebit Nano Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Weebit Nano reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Analog Devices and Weebit Nano

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

The idea behind Analog Devices and Weebit Nano Limited 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.