Correlation Between Teradata Corp and American Homes
Can any of the company-specific risk be diversified away by investing in both Teradata Corp and American Homes 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 Teradata Corp and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradata Corp and American Homes 4, you can compare the effects of market volatilities on Teradata Corp and American Homes 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 Teradata Corp with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradata Corp and American Homes.
Diversification Opportunities for Teradata Corp and American Homes
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Teradata and American is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Teradata Corp and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 and Teradata Corp 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 Teradata Corp are associated (or correlated) with American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of Teradata Corp i.e., Teradata Corp and American Homes go up and down completely randomly.
Pair Corralation between Teradata Corp and American Homes
Assuming the 90 days trading horizon Teradata Corp is expected to under-perform the American Homes. In addition to that, Teradata Corp is 1.78 times more volatile than American Homes 4. It trades about -0.01 of its total potential returns per unit of risk. American Homes 4 is currently generating about 0.02 per unit of volatility. If you would invest 3,137 in American Homes 4 on November 5, 2024 and sell it today you would earn a total of 351.00 from holding American Homes 4 or generate 11.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.6% |
| Values | Daily Returns |
Teradata Corp vs. American Homes 4
Performance |
| Timeline |
| Teradata Corp |
| American Homes 4 |
Teradata Corp and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradata Corp and American Homes
The main advantage of trading using opposite Teradata Corp and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradata Corp position performs unexpectedly, American Homes 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 American Homes will offset losses from the drop in American Homes' long position.| Teradata Corp vs. Spirent Communications plc | Teradata Corp vs. Batm Advanced Communications | Teradata Corp vs. Universal Display Corp | Teradata Corp vs. Endeavour Mining Corp |
| American Homes vs. Lowland Investment Co | American Homes vs. Monks Investment Trust | American Homes vs. Bigblu Broadband PLC | American Homes vs. Cairo Communication SpA |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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