Correlation Between Teradata Corp and Acadia Healthcare
Can any of the company-specific risk be diversified away by investing in both Teradata Corp and Acadia Healthcare 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 Acadia Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradata Corp and Acadia Healthcare, you can compare the effects of market volatilities on Teradata Corp and Acadia Healthcare 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 Acadia Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradata Corp and Acadia Healthcare.
Diversification Opportunities for Teradata Corp and Acadia Healthcare
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Teradata and Acadia is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Teradata Corp and Acadia Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Healthcare 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 Acadia Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Healthcare has no effect on the direction of Teradata Corp i.e., Teradata Corp and Acadia Healthcare go up and down completely randomly.
Pair Corralation between Teradata Corp and Acadia Healthcare
Assuming the 90 days horizon Teradata Corp is expected to under-perform the Acadia Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Teradata Corp is 1.96 times less risky than Acadia Healthcare. The stock trades about -0.02 of its potential returns per unit of risk. The Acadia Healthcare is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 3,740 in Acadia Healthcare on October 11, 2024 and sell it today you would earn a total of 700.00 from holding Acadia Healthcare or generate 18.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradata Corp vs. Acadia Healthcare
Performance |
| Timeline |
| Teradata Corp |
| Acadia Healthcare |
Teradata Corp and Acadia Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradata Corp and Acadia Healthcare
The main advantage of trading using opposite Teradata Corp and Acadia Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradata Corp position performs unexpectedly, Acadia Healthcare 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 Acadia Healthcare will offset losses from the drop in Acadia Healthcare's long position.The idea behind Teradata Corp and Acadia Healthcare 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.| Acadia Healthcare vs. BC IRON | Acadia Healthcare vs. Monument Mining Limited | Acadia Healthcare vs. Dentsply Sirona | Acadia Healthcare vs. Nippon Steel |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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