Correlation Between SmartStop Self and Analog Devices

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

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

Diversification Opportunities for SmartStop Self and Analog Devices

0.05

Correlation Coefficient

SmartStop Self  Analog Devices

Significant diversification

The 3 months correlation between SmartStop and Analog is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding SmartStop Self Storage and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and SmartStop Self 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 SmartStop Self Storage 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 SmartStop Self i.e., SmartStop Self and Analog Devices go up and down completely randomly.

Pair Corralation between SmartStop Self and Analog Devices

Assuming the 90 days horizon SmartStop Self Storage is expected to generate 92.73 times more return on investment than Analog Devices. However, SmartStop Self is 92.73 times more volatile than Analog Devices. It trades about 0.19 of its potential returns per unit of risk. Analog Devices is currently generating about -0.02 per unit of risk. If you would invest  3,560  in SmartStop Self Storage on December 30, 2024 and sell it today you would lose (244.00) from holding SmartStop Self Storage or give up 6.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

SmartStop Self Storage  vs.  Analog Devices

SmartStop Self Storage

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SmartStop Self Storage are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, SmartStop Self reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with SmartStop Self and Analog Devices

The main advantage of trading using opposite SmartStop Self and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SmartStop Self 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 SmartStop Self Storage 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.