Correlation Between Teledyne Technologies and Teva Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Teledyne Technologies and Teva Pharmaceutical 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 Teledyne Technologies and Teva Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teledyne Technologies Incorporated and Teva Pharmaceutical Industries, you can compare the effects of market volatilities on Teledyne Technologies and Teva Pharmaceutical 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 Teledyne Technologies with a short position of Teva Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teledyne Technologies and Teva Pharmaceutical.
Diversification Opportunities for Teledyne Technologies and Teva Pharmaceutical
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Teledyne and Teva is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Teledyne Technologies Incorpor and Teva Pharmaceutical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teva Pharmaceutical and Teledyne Technologies 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 Teledyne Technologies Incorporated are associated (or correlated) with Teva Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teva Pharmaceutical has no effect on the direction of Teledyne Technologies i.e., Teledyne Technologies and Teva Pharmaceutical go up and down completely randomly.
Pair Corralation between Teledyne Technologies and Teva Pharmaceutical
Considering the 90-day investment horizon Teledyne Technologies is expected to generate 132.19 times less return on investment than Teva Pharmaceutical. But when comparing it to its historical volatility, Teledyne Technologies Incorporated is 1.88 times less risky than Teva Pharmaceutical. It trades about 0.0 of its potential returns per unit of risk. Teva Pharmaceutical Industries is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 255,500 in Teva Pharmaceutical Industries on January 24, 2024 and sell it today you would earn a total of 242,300 from holding Teva Pharmaceutical Industries or generate 94.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 78.63% |
| Values | Daily Returns |
Teledyne Technologies Incorpor vs. Teva Pharmaceutical Industries
Performance |
| Timeline |
| Teledyne Technologies |
| Teva Pharmaceutical |
Teledyne Technologies and Teva Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teledyne Technologies and Teva Pharmaceutical
The main advantage of trading using opposite Teledyne Technologies and Teva Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teledyne Technologies position performs unexpectedly, Teva Pharmaceutical 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 Teva Pharmaceutical will offset losses from the drop in Teva Pharmaceutical's long position.| Teledyne Technologies vs. Vontier Corp | Teledyne Technologies vs. ESCO Technologies | Teledyne Technologies vs. MKS Instruments | Teledyne Technologies vs. Sensata Technologies Holding |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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