Correlation Between Roper Technologies and Teledyne Technologies

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

By analyzing existing cross correlation between Roper Technologies Common and Teledyne Technologies Incorporated, you can compare the effects of market volatilities on Roper Technologies and Teledyne Technologies 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 Roper Technologies with a short position of Teledyne Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roper Technologies and Teledyne Technologies.

Diversification Opportunities for Roper Technologies and Teledyne Technologies

0.5

Correlation Coefficient

Roper Technologies  Teledyne Technologies

Very weak diversification

The 3 months correlation between Roper and Teledyne is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Roper Technologies Common and Teledyne Technologies Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teledyne Technologies and Roper 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 Roper Technologies Common are associated (or correlated) with Teledyne Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teledyne Technologies has no effect on the direction of Roper Technologies i.e., Roper Technologies and Teledyne Technologies go up and down completely randomly.

Pair Corralation between Roper Technologies and Teledyne Technologies

Considering the 90-day investment horizon Roper Technologies Common is expected to generate 0.97 times more return on investment than Teledyne Technologies. However, Roper Technologies Common is 1.03 times less risky than Teledyne Technologies. It trades about -0.18 of its potential returns per unit of risk. Teledyne Technologies Incorporated is currently generating about -0.27 per unit of risk. If you would invest  55,330  in Roper Technologies Common on January 20, 2024 and sell it today you would lose (1,892) from holding Roper Technologies Common or give up 3.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Roper Technologies Common  vs.  Teledyne Technologies Incorpor

Roper Technologies Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roper Technologies Common has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Roper Technologies is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Teledyne Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teledyne Technologies Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Roper Technologies and Teledyne Technologies

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

The idea behind Roper Technologies Common and Teledyne Technologies 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.