Correlation Between Teledyne Technologies and Trimble

Can any of the company-specific risk be diversified away by investing in both Teledyne Technologies and Trimble 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 Trimble 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 Trimble, you can compare the effects of market volatilities on Teledyne Technologies and Trimble 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 Trimble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teledyne Technologies and Trimble.

Diversification Opportunities for Teledyne Technologies and Trimble

-0.26

Correlation Coefficient

Teledyne Technologies  Trimble

Very good diversification

The 3 months correlation between Teledyne and Trimble is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Teledyne Technologies Incorpor and Trimble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trimble 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 Trimble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trimble has no effect on the direction of Teledyne Technologies i.e., Teledyne Technologies and Trimble go up and down completely randomly.

Pair Corralation between Teledyne Technologies and Trimble

Considering the 90-day investment horizon Teledyne Technologies Incorporated is expected to under-perform the Trimble. In addition to that, Teledyne Technologies is 1.93 times more volatile than Trimble. It trades about -0.26 of its total potential returns per unit of risk. Trimble is currently generating about -0.21 per unit of volatility. If you would invest  6,310  in Trimble on January 25, 2024 and sell it today you would lose (359.00) from holding Trimble or give up 5.69% of portfolio value over 90 days.

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

Teledyne Technologies Incorpor  vs.  Trimble

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 abnormal performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Trimble

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trimble are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady primary indicators, Trimble sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Teledyne Technologies and Trimble

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

The idea behind Teledyne Technologies Incorporated and Trimble 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.