Correlation Between Extreme Networks and Analog Devices
Can any of the company-specific risk be diversified away by investing in both Extreme Networks 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 Extreme Networks and Analog Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Extreme Networks and Analog Devices, you can compare the effects of market volatilities on Extreme Networks 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 Extreme Networks with a short position of Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extreme Networks and Analog Devices.
Diversification Opportunities for Extreme Networks and Analog Devices
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Extreme and Analog is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Extreme Networks and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and Extreme Networks 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 Extreme Networks 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 Extreme Networks i.e., Extreme Networks and Analog Devices go up and down completely randomly.
Pair Corralation between Extreme Networks and Analog Devices
Given the investment horizon of 90 days Extreme Networks is expected to generate 1.32 times less return on investment than Analog Devices. In addition to that, Extreme Networks is 1.59 times more volatile than Analog Devices. It trades about 0.02 of its total potential returns per unit of risk. Analog Devices is currently generating about 0.05 per unit of volatility. If you would invest 15,968 in Analog Devices on February 28, 2024 and sell it today you would earn a total of 7,283 from holding Analog Devices or generate 45.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Extreme Networks vs. Analog Devices
Performance |
Timeline |
Extreme Networks |
Analog Devices |
Extreme Networks and Analog Devices Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Extreme Networks and Analog Devices
The main advantage of trading using opposite Extreme Networks and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extreme Networks 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.Extreme Networks vs. MicroAlgo | Extreme Networks vs. Green Stream Holdings | Extreme Networks vs. Americold Realty Trust | Extreme Networks vs. Collegium Pharmaceutical |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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