Correlation Between Analog Devices and Expand Energy

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

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

Diversification Opportunities for Analog Devices and Expand Energy

-0.14

Correlation Coefficient

Analog Devices  Expand Energy

Good diversification

The 3 months correlation between Analog and Expand is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Expand Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expand Energy 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 Expand Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expand Energy has no effect on the direction of Analog Devices i.e., Analog Devices and Expand Energy go up and down completely randomly.

Pair Corralation between Analog Devices and Expand Energy

Considering the 90-day investment horizon Analog Devices is expected to generate 0.75 times more return on investment than Expand Energy. However, Analog Devices is 1.33 times less risky than Expand Energy. It trades about 0.02 of its potential returns per unit of risk. Expand Energy is currently generating about -0.08 per unit of risk. If you would invest  22,214  in Analog Devices on May 12, 2025 and sell it today you would earn a total of  181.00  from holding Analog Devices or generate 0.81% return on investment over 90 days.

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

Analog Devices  vs.  Expand Energy

Analog Devices

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Analog Devices are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Expand Energy

Risk-Adjusted Performance

Weakest

Over the last 90 days Expand Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Analog Devices and Expand Energy

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

The idea behind Analog Devices and Expand Energy 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.