Correlation Between Analog Devices and Alpha

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

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

Diversification Opportunities for Analog Devices and Alpha

0.81

Correlation Coefficient

Analog Devices  Alpha

Very poor diversification

The 3 months correlation between Analog and Alpha is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Alpha and Omega in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha and Omega 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 Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha and Omega has no effect on the direction of Analog Devices i.e., Analog Devices and Alpha go up and down completely randomly.

Pair Corralation between Analog Devices and Alpha

Considering the 90-day investment horizon Analog Devices is expected to under-perform the Alpha. But the stock apears to be less risky and, when comparing its historical volatility, Analog Devices is 2.14 times less risky than Alpha. The stock trades about 0.0 of its potential returns per unit of risk. The Alpha and Omega is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,435  in Alpha and Omega on May 14, 2025 and sell it today you would earn a total of  93.00  from holding Alpha and Omega or generate 3.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Analog Devices  vs.  Alpha and Omega

Analog Devices

Risk-Adjusted Performance

Weakest

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.

Alpha and Omega

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha and Omega are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Alpha may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Analog Devices and Alpha

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

The idea behind Analog Devices and Alpha and Omega 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 Transaction History module to view history of all your transactions and understand their impact on performance.