Correlation Between Apple and TERADATA
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and TERADATA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and TERADATA, you can compare the effects of market volatilities on Apple 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 Apple with a short position of TERADATA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and TERADATA.
Diversification Opportunities for Apple and TERADATA
Poor diversification
The 3 months correlation between Apple and TERADATA is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and TERADATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TERADATA and Apple 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 Apple Inc 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 Apple i.e., Apple and TERADATA go up and down completely randomly.
Pair Corralation between Apple and TERADATA
Assuming the 90 days trading horizon Apple Inc is expected to under-perform the TERADATA. In addition to that, Apple is 2.2 times more volatile than TERADATA. It trades about -0.09 of its total potential returns per unit of risk. TERADATA is currently generating about 0.17 per unit of volatility. If you would invest 3,020 in TERADATA on November 3, 2024 and sell it today you would earn a total of 100.00 from holding TERADATA or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. TERADATA
Performance |
| Timeline |
| Apple Inc |
| TERADATA |
Apple and TERADATA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and TERADATA
The main advantage of trading using opposite Apple and TERADATA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. ARROW ELECTRONICS | Apple vs. Dairy Farm International | Apple vs. AUST AGRICULTURAL | Apple vs. North American Construction |
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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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