Correlation Between Teradyne and International Business
Can any of the company-specific risk be diversified away by investing in both Teradyne and International Business 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 International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and International Business Machines, you can compare the effects of market volatilities on Teradyne and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and International Business.
Diversification Opportunities for Teradyne and International Business
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Teradyne and International is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Teradyne i.e., Teradyne and International Business go up and down completely randomly.
Pair Corralation between Teradyne and International Business
Considering the 90-day investment horizon Teradyne is expected to under-perform the International Business. In addition to that, Teradyne is 2.68 times more volatile than International Business Machines. It trades about -0.2 of its total potential returns per unit of risk. International Business Machines is currently generating about -0.33 per unit of volatility. If you would invest 19,396 in International Business Machines on January 20, 2024 and sell it today you would lose (1,238) from holding International Business Machines or give up 6.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradyne vs. International Business Machine
Performance |
| Timeline |
| Teradyne |
| International Business |
Teradyne and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and International Business
The main advantage of trading using opposite Teradyne and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
| International Business vs. Information Services Group | International Business vs. Home Bancorp | International Business vs. CRA International | International Business vs. Aquagold International |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |