Correlation Between Alliance Fiber and Analog Devices

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

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

Diversification Opportunities for Alliance Fiber and Analog Devices

0.0

Correlation Coefficient

Alliance Fiber  Analog Devices

Pay attention - limited upside

The 3 months correlation between Alliance and Analog is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Fiber Optic and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and Alliance Fiber 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 Alliance Fiber Optic 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 Alliance Fiber i.e., Alliance Fiber and Analog Devices go up and down completely randomly.

Pair Corralation between Alliance Fiber and Analog Devices

If you would invest  19,063  in Analog Devices on January 24, 2024 and sell it today you would lose (70.00) from holding Analog Devices or give up 0.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Alliance Fiber Optic  vs.  Analog Devices

Alliance Fiber Optic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliance Fiber Optic has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Alliance Fiber is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Analog Devices

Risk-Adjusted Performance

0 of 100

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 Alliance Fiber and Analog Devices

The main advantage of trading using opposite Alliance Fiber and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Fiber 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 Alliance Fiber Optic 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.