Correlation Between Axfood AB and Teradata Corp
Can any of the company-specific risk be diversified away by investing in both Axfood AB and Teradata Corp 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 Axfood AB and Teradata Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axfood AB and Teradata Corp, you can compare the effects of market volatilities on Axfood AB and Teradata Corp 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 Axfood AB with a short position of Teradata Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and Teradata Corp.
Diversification Opportunities for Axfood AB and Teradata Corp
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Axfood and Teradata is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Axfood AB and Teradata Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradata Corp and Axfood AB 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 Axfood AB are associated (or correlated) with Teradata Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradata Corp has no effect on the direction of Axfood AB i.e., Axfood AB and Teradata Corp go up and down completely randomly.
Pair Corralation between Axfood AB and Teradata Corp
Assuming the 90 days trading horizon Axfood AB is expected to generate 2.9 times less return on investment than Teradata Corp. But when comparing it to its historical volatility, Axfood AB is 1.57 times less risky than Teradata Corp. It trades about 0.08 of its potential returns per unit of risk. Teradata Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,114 in Teradata Corp on October 30, 2024 and sell it today you would earn a total of 109.00 from holding Teradata Corp or generate 3.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 75.0% |
Values | Daily Returns |
Axfood AB vs. Teradata Corp
Performance |
Timeline |
Axfood AB |
Teradata Corp |
Axfood AB and Teradata Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Axfood AB and Teradata Corp
The main advantage of trading using opposite Axfood AB and Teradata Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axfood AB position performs unexpectedly, Teradata Corp 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 Teradata Corp will offset losses from the drop in Teradata Corp's long position.Axfood AB vs. Associated British Foods | Axfood AB vs. Melia Hotels | Axfood AB vs. Fevertree Drinks Plc | Axfood AB vs. Wyndham Hotels Resorts |
Teradata Corp vs. Pfeiffer Vacuum Technology | Teradata Corp vs. Cognizant Technology Solutions | Teradata Corp vs. Advanced Medical Solutions | Teradata Corp vs. Xeros Technology Group |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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