Correlation Between Analog Devices and MicroStrategy Incorporated

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

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

Diversification Opportunities for Analog Devices and MicroStrategy Incorporated

-0.53

Correlation Coefficient

Analog Devices  MicroStrategy Incorporated

Excellent diversification

The 3 months correlation between Analog and MicroStrategy is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and MicroStrategy Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroStrategy Incorporated 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 MicroStrategy Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroStrategy Incorporated has no effect on the direction of Analog Devices i.e., Analog Devices and MicroStrategy Incorporated go up and down completely randomly.

Pair Corralation between Analog Devices and MicroStrategy Incorporated

Considering the 90-day investment horizon Analog Devices is expected to generate 0.5 times more return on investment than MicroStrategy Incorporated. However, Analog Devices is 2.0 times less risky than MicroStrategy Incorporated. It trades about 0.04 of its potential returns per unit of risk. MicroStrategy Incorporated is currently generating about -0.16 per unit of risk. If you would invest  23,456  in Analog Devices on July 22, 2025 and sell it today you would earn a total of  831.00  from holding Analog Devices or generate 3.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Analog Devices  vs.  MicroStrategy Incorporated

Analog Devices

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Analog Devices are ranked lower than 3 (%) 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 latest stock price confusion, may contribute to short-horizon losses for the traders.

MicroStrategy Incorporated

Risk-Adjusted Performance

Weakest

Over the last 90 days MicroStrategy Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in November 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Analog Devices and MicroStrategy Incorporated

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

The idea behind Analog Devices and MicroStrategy Incorporated 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.