Correlation Between Analog Devices and GEN Restaurant

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

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

Diversification Opportunities for Analog Devices and GEN Restaurant

0.17

Correlation Coefficient

Analog Devices  GEN Restaurant

Average diversification

The 3 months correlation between Analog and GEN is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, 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 GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of Analog Devices i.e., Analog Devices and GEN Restaurant go up and down completely randomly.

Pair Corralation between Analog Devices and GEN Restaurant

Considering the 90-day investment horizon Analog Devices is expected to generate 36.12 times less return on investment than GEN Restaurant. But when comparing it to its historical volatility, Analog Devices is 28.68 times less risky than GEN Restaurant. It trades about 0.04 of its potential returns per unit of risk. GEN Restaurant Group, is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.00  in GEN Restaurant Group, on September 4, 2024 and sell it today you would earn a total of  868.00  from holding GEN Restaurant Group, or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	73.33%
Values	Daily Returns

Analog Devices  vs.  GEN Restaurant Group,

Analog Devices

Risk-Adjusted Performance

1 of 100

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.

GEN Restaurant Group,

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GEN Restaurant Group, are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, GEN Restaurant is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Analog Devices and GEN Restaurant

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

The idea behind Analog Devices and GEN Restaurant Group, 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.