Correlation Between Knowles and TERADATA
Can any of the company-specific risk be diversified away by investing in both Knowles and TERADATA 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 Knowles and TERADATA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knowles and TERADATA, you can compare the effects of market volatilities on Knowles and TERADATA 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 Knowles with a short position of TERADATA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knowles and TERADATA.
Diversification Opportunities for Knowles and TERADATA
Very weak diversification
The 3 months correlation between Knowles and TERADATA is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Knowles and TERADATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TERADATA and Knowles 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 Knowles are associated (or correlated) with TERADATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TERADATA has no effect on the direction of Knowles i.e., Knowles and TERADATA go up and down completely randomly.
Pair Corralation between Knowles and TERADATA
Assuming the 90 days horizon Knowles is expected to generate 1.02 times more return on investment than TERADATA. However, Knowles is 1.02 times more volatile than TERADATA. It trades about 0.02 of its potential returns per unit of risk. TERADATA is currently generating about 0.0 per unit of risk. If you would invest 1,770 in Knowles on October 23, 2024 and sell it today you would earn a total of 200.00 from holding Knowles or generate 11.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Knowles vs. TERADATA
Performance |
| Timeline |
| Knowles |
| TERADATA |
Knowles and TERADATA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knowles and TERADATA
The main advantage of trading using opposite Knowles and TERADATA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knowles position performs unexpectedly, TERADATA 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 will offset losses from the drop in TERADATA's long position.| Knowles vs. Fair Isaac Corp | Knowles vs. Altair Engineering | Knowles vs. Siemens Healthineers AG | Knowles vs. CLOVER HEALTH INV |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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