Correlation Between Air Products and Teradyne
Can any of the company-specific risk be diversified away by investing in both Air Products and Teradyne 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 Air Products and Teradyne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products and and Teradyne, you can compare the effects of market volatilities on Air Products and Teradyne 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 Air Products with a short position of Teradyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Teradyne.
Diversification Opportunities for Air Products and Teradyne
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and Teradyne is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne and Air Products 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 Air Products and are associated (or correlated) with Teradyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradyne has no effect on the direction of Air Products i.e., Air Products and Teradyne go up and down completely randomly.
Pair Corralation between Air Products and Teradyne
Considering the 90-day investment horizon Air Products and is expected to generate 0.51 times more return on investment than Teradyne. However, Air Products and is 1.96 times less risky than Teradyne. It trades about 0.38 of its potential returns per unit of risk. Teradyne is currently generating about 0.1 per unit of risk. If you would invest 31,053 in Air Products and on September 1, 2024 and sell it today you would earn a total of 2,380 from holding Air Products and or generate 7.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. Teradyne
Performance |
| Timeline |
| Air Products |
| Teradyne |
Air Products and Teradyne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Teradyne
The main advantage of trading using opposite Air Products and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Teradyne 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 Teradyne will offset losses from the drop in Teradyne's long position.| Air Products vs. PPG Industries | Air Products vs. Ecolab Inc | Air Products vs. Sherwin Williams Co | Air Products vs. LyondellBasell Industries NV |
| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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