Correlation Between Arm Holdings and Analog Devices
Can any of the company-specific risk be diversified away by investing in both Arm Holdings 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 Arm Holdings and Analog Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arm Holdings plc and Analog Devices, you can compare the effects of market volatilities on Arm Holdings 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 Arm Holdings with a short position of Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arm Holdings and Analog Devices.
Diversification Opportunities for Arm Holdings and Analog Devices
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arm and Analog is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Arm Holdings plc and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and Arm Holdings 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 Arm Holdings plc 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 Arm Holdings i.e., Arm Holdings and Analog Devices go up and down completely randomly.
Pair Corralation between Arm Holdings and Analog Devices
Considering the 90-day investment horizon Arm Holdings is expected to generate 2.91 times less return on investment than Analog Devices. In addition to that, Arm Holdings is 1.71 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 0.1 per unit of volatility. If you would invest 24,898 in Analog Devices on September 6, 2025 and sell it today you would earn a total of 2,926 from holding Analog Devices or generate 11.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arm Holdings plc vs. Analog Devices
Performance |
| Timeline |
| Arm Holdings plc |
| Analog Devices |
Arm Holdings and Analog Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arm Holdings and Analog Devices
The main advantage of trading using opposite Arm Holdings and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arm Holdings 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.| Arm Holdings vs. World of Wireless | Arm Holdings vs. Fidelity National Information | Arm Holdings vs. B Communications | Arm Holdings vs. Alibaba Health Information |
| Analog Devices vs. Hunter Creek Mining | Analog Devices vs. RTG Mining | Analog Devices vs. United Industrial | Analog Devices vs. Equal Trading |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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