Correlation Between Analog Devices and Advanced Micro
Can any of the company-specific risk be diversified away by investing in both Analog Devices and Advanced Micro 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 Advanced Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Advanced Micro Devices, you can compare the effects of market volatilities on Analog Devices and Advanced Micro 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 Advanced Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Advanced Micro.
Diversification Opportunities for Analog Devices and Advanced Micro
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Analog and Advanced is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices 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 Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of Analog Devices i.e., Analog Devices and Advanced Micro go up and down completely randomly.
Pair Corralation between Analog Devices and Advanced Micro
Considering the 90-day investment horizon Analog Devices is expected to generate 0.67 times more return on investment than Advanced Micro. However, Analog Devices is 1.5 times less risky than Advanced Micro. It trades about 0.06 of its potential returns per unit of risk. Advanced Micro Devices is currently generating about -0.25 per unit of risk. If you would invest 19,063 in Analog Devices on January 25, 2024 and sell it today you would earn a total of 447.00 from holding Analog Devices or generate 2.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. Advanced Micro Devices
Performance |
| Timeline |
| Analog Devices |
| Advanced Micro Devices |
Analog Devices and Advanced Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Advanced Micro
The main advantage of trading using opposite Analog Devices and Advanced Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Advanced Micro 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 Advanced Micro will offset losses from the drop in Advanced Micro's long position.| Analog Devices vs. NXP Semiconductors NV | Analog Devices vs. Qualcomm Incorporated | Analog Devices vs. Broadcom | Analog Devices vs. Microchip Technology |
| Advanced Micro vs. Taiwan Semiconductor Manufacturing | Advanced Micro vs. Intel | Advanced Micro vs. Marvell Technology Group | Advanced Micro vs. Micron Technology |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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