Correlation Between Teradata Corp and European Metals
Can any of the company-specific risk be diversified away by investing in both Teradata Corp and European Metals 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 European Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradata Corp and European Metals Holdings, you can compare the effects of market volatilities on Teradata Corp and European Metals 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 European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradata Corp and European Metals.
Diversification Opportunities for Teradata Corp and European Metals
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Teradata and European is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Teradata Corp and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings 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 European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of Teradata Corp i.e., Teradata Corp and European Metals go up and down completely randomly.
Pair Corralation between Teradata Corp and European Metals
Assuming the 90 days trading horizon Teradata Corp is expected to generate 0.69 times more return on investment than European Metals. However, Teradata Corp is 1.46 times less risky than European Metals. It trades about 0.01 of its potential returns per unit of risk. European Metals Holdings is currently generating about -0.07 per unit of risk. If you would invest 3,522 in Teradata Corp on October 27, 2024 and sell it today you would lose (296.00) from holding Teradata Corp or give up 8.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.14% |
| Values | Daily Returns |
Teradata Corp vs. European Metals Holdings
Performance |
| Timeline |
| Teradata Corp |
| European Metals Holdings |
Teradata Corp and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradata Corp and European Metals
The main advantage of trading using opposite Teradata Corp and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradata Corp position performs unexpectedly, European Metals 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 European Metals will offset losses from the drop in European Metals' long position.| Teradata Corp vs. Jacquet Metal Service | Teradata Corp vs. Bisichi Mining PLC | Teradata Corp vs. Eastinco Mining Exploration | Teradata Corp vs. Aberdeen Diversified Income |
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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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