Correlation Between Teradyne and Cadiz
Can any of the company-specific risk be diversified away by investing in both Teradyne and Cadiz 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 Teradyne and Cadiz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and Cadiz Inc, you can compare the effects of market volatilities on Teradyne and Cadiz 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 Teradyne with a short position of Cadiz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Cadiz.
Diversification Opportunities for Teradyne and Cadiz
Good diversification
The 3 months correlation between Teradyne and Cadiz is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Cadiz Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadiz Inc and Teradyne 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 Teradyne are associated (or correlated) with Cadiz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadiz Inc has no effect on the direction of Teradyne i.e., Teradyne and Cadiz go up and down completely randomly.
Pair Corralation between Teradyne and Cadiz
Considering the 90-day investment horizon Teradyne is expected to generate 0.6 times more return on investment than Cadiz. However, Teradyne is 1.68 times less risky than Cadiz. It trades about -0.12 of its potential returns per unit of risk. Cadiz Inc is currently generating about -0.15 per unit of risk. If you would invest 10,711 in Teradyne on January 20, 2024 and sell it today you would lose (691.00) from holding Teradyne or give up 6.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradyne vs. Cadiz Inc
Performance |
| Timeline |
| Teradyne |
| Cadiz Inc |
Teradyne and Cadiz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and Cadiz
The main advantage of trading using opposite Teradyne and Cadiz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, Cadiz 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 Cadiz will offset losses from the drop in Cadiz's long position.| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
| Cadiz vs. Middlesex Water | Cadiz vs. SJW Corporation | Cadiz vs. California Water Service | Cadiz vs. The York Water |
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 CEOs Directory module to screen CEOs from public companies around the world.
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