Correlation Between Advanced Micro and Analog Devices
Can any of the company-specific risk be diversified away by investing in both Advanced Micro 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 Advanced Micro and Analog Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Micro Devices and Analog Devices, you can compare the effects of market volatilities on Advanced Micro 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 Advanced Micro with a short position of Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Micro and Analog Devices.
Diversification Opportunities for Advanced Micro and Analog Devices
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Advanced and Analog is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and Advanced Micro 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 Advanced Micro Devices 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 Advanced Micro i.e., Advanced Micro and Analog Devices go up and down completely randomly.
Pair Corralation between Advanced Micro and Analog Devices
Considering the 90-day investment horizon Advanced Micro Devices is expected to under-perform the Analog Devices. In addition to that, Advanced Micro is 1.47 times more volatile than Analog Devices. It trades about -0.23 of its total potential returns per unit of risk. Analog Devices is currently generating about 0.1 per unit of volatility. If you would invest 18,896 in Analog Devices on January 26, 2024 and sell it today you would earn a total of 754.00 from holding Analog Devices or generate 3.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Micro Devices vs. Analog Devices
Performance |
| Timeline |
| Advanced Micro Devices |
| Analog Devices |
Advanced Micro and Analog Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Micro and Analog Devices
The main advantage of trading using opposite Advanced Micro and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Micro 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.| Advanced Micro vs. Taiwan Semiconductor Manufacturing | Advanced Micro vs. Intel | Advanced Micro vs. Marvell Technology Group | Advanced Micro vs. Micron Technology |
| Analog Devices vs. NXP Semiconductors NV | Analog Devices vs. Qualcomm Incorporated | Analog Devices vs. Broadcom | Analog Devices vs. Microchip 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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