Correlation Between Teradata Corp and STEEL DYNAMICS
Can any of the company-specific risk be diversified away by investing in both Teradata Corp and STEEL DYNAMICS 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 STEEL DYNAMICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradata Corp and STEEL DYNAMICS, you can compare the effects of market volatilities on Teradata Corp and STEEL DYNAMICS 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 STEEL DYNAMICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradata Corp and STEEL DYNAMICS.
Diversification Opportunities for Teradata Corp and STEEL DYNAMICS
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Teradata and STEEL is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Teradata Corp and STEEL DYNAMICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEEL DYNAMICS 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 STEEL DYNAMICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEEL DYNAMICS has no effect on the direction of Teradata Corp i.e., Teradata Corp and STEEL DYNAMICS go up and down completely randomly.
Pair Corralation between Teradata Corp and STEEL DYNAMICS
Assuming the 90 days horizon Teradata Corp is expected to generate 0.73 times more return on investment than STEEL DYNAMICS. However, Teradata Corp is 1.37 times less risky than STEEL DYNAMICS. It trades about -0.07 of its potential returns per unit of risk. STEEL DYNAMICS is currently generating about -0.31 per unit of risk. If you would invest 3,060 in Teradata Corp on October 12, 2024 and sell it today you would lose (60.00) from holding Teradata Corp or give up 1.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Teradata Corp vs. STEEL DYNAMICS
Performance |
| Timeline |
| Teradata Corp |
| STEEL DYNAMICS |
Teradata Corp and STEEL DYNAMICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradata Corp and STEEL DYNAMICS
The main advantage of trading using opposite Teradata Corp and STEEL DYNAMICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradata Corp position performs unexpectedly, STEEL DYNAMICS 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 STEEL DYNAMICS will offset losses from the drop in STEEL DYNAMICS's long position.The idea behind Teradata Corp and STEEL DYNAMICS 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.| STEEL DYNAMICS vs. BW OFFSHORE LTD | STEEL DYNAMICS vs. EIDESVIK OFFSHORE NK | STEEL DYNAMICS vs. Teradata Corp | STEEL DYNAMICS vs. CN DATANG C |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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