Correlation Between Cromwell Property and Analog Devices

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

By analyzing existing cross correlation between Cromwell Property Group and Analog Devices, you can compare the effects of market volatilities on Cromwell Property and Analog Devices 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 Cromwell Property with a short position of Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cromwell Property and Analog Devices.

Diversification Opportunities for Cromwell Property and Analog Devices

-0.26

Correlation Coefficient

Cromwell Property  Analog Devices

Very good diversification

The 3 months correlation between Cromwell and Analog is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Cromwell Property Group and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and Cromwell Property 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 Cromwell Property Group are associated (or correlated) with Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of Cromwell Property i.e., Cromwell Property and Analog Devices go up and down completely randomly.

Pair Corralation between Cromwell Property and Analog Devices

Assuming the 90 days horizon Cromwell Property Group is expected to under-perform the Analog Devices. In addition to that, Cromwell Property is 1.21 times more volatile than Analog Devices. It trades about -0.04 of its total potential returns per unit of risk. Analog Devices is currently generating about 0.04 per unit of volatility. If you would invest  16,013  in Analog Devices on October 9, 2024 and sell it today you would earn a total of  5,787  from holding Analog Devices or generate 36.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cromwell Property Group  vs.  Analog Devices

Cromwell Property

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cromwell Property Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Cromwell Property is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

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

Pair Trading with Cromwell Property and Analog Devices

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

The idea behind Cromwell Property Group and Analog Devices 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.