Correlation Between TERADATA and KENNAMETAL INC
Can any of the company-specific risk be diversified away by investing in both TERADATA and KENNAMETAL INC 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 and KENNAMETAL INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TERADATA and KENNAMETAL INC, you can compare the effects of market volatilities on TERADATA and KENNAMETAL INC 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 with a short position of KENNAMETAL INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of TERADATA and KENNAMETAL INC.
Diversification Opportunities for TERADATA and KENNAMETAL INC
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between TERADATA and KENNAMETAL is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding TERADATA and KENNAMETAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENNAMETAL INC and TERADATA 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 are associated (or correlated) with KENNAMETAL INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENNAMETAL INC has no effect on the direction of TERADATA i.e., TERADATA and KENNAMETAL INC go up and down completely randomly.
Pair Corralation between TERADATA and KENNAMETAL INC
Assuming the 90 days trading horizon TERADATA is expected to under-perform the KENNAMETAL INC. But the stock apears to be less risky and, when comparing its historical volatility, TERADATA is 2.25 times less risky than KENNAMETAL INC. The stock trades about -0.04 of its potential returns per unit of risk. The KENNAMETAL INC is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,303 in KENNAMETAL INC on September 1, 2024 and sell it today you would earn a total of 377.00 from holding KENNAMETAL INC or generate 16.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TERADATA vs. KENNAMETAL INC
Performance |
| Timeline |
| TERADATA |
| KENNAMETAL INC |
TERADATA and KENNAMETAL INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TERADATA and KENNAMETAL INC
The main advantage of trading using opposite TERADATA and KENNAMETAL INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TERADATA position performs unexpectedly, KENNAMETAL INC 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 KENNAMETAL INC will offset losses from the drop in KENNAMETAL INC's long position.| TERADATA vs. LIFENET INSURANCE CO | TERADATA vs. Check Point Software | TERADATA vs. REVO INSURANCE SPA | TERADATA vs. HANOVER INSURANCE |
| KENNAMETAL INC vs. Axcelis Technologies | KENNAMETAL INC vs. PKSHA TECHNOLOGY INC | KENNAMETAL INC vs. Playtech plc | KENNAMETAL INC vs. GLG LIFE TECH |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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