Correlation Between Big 5 and TERADATA
Can any of the company-specific risk be diversified away by investing in both Big 5 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 Big 5 and TERADATA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big 5 Sporting and TERADATA, you can compare the effects of market volatilities on Big 5 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 Big 5 with a short position of TERADATA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big 5 and TERADATA.
Diversification Opportunities for Big 5 and TERADATA
Good diversification
The 3 months correlation between Big and TERADATA is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Big 5 Sporting and TERADATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TERADATA and Big 5 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 Big 5 Sporting 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 Big 5 i.e., Big 5 and TERADATA go up and down completely randomly.
Pair Corralation between Big 5 and TERADATA
Assuming the 90 days horizon Big 5 is expected to generate 2.95 times less return on investment than TERADATA. In addition to that, Big 5 is 3.36 times more volatile than TERADATA. It trades about 0.02 of its total potential returns per unit of risk. TERADATA is currently generating about 0.18 per unit of volatility. If you would invest 2,540 in TERADATA on September 3, 2024 and sell it today you would earn a total of 400.00 from holding TERADATA or generate 15.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big 5 Sporting vs. TERADATA
Performance |
| Timeline |
| Big 5 Sporting |
| TERADATA |
Big 5 and TERADATA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big 5 and TERADATA
The main advantage of trading using opposite Big 5 and TERADATA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big 5 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.The idea behind Big 5 Sporting and TERADATA 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.| TERADATA vs. PKSHA TECHNOLOGY INC | TERADATA vs. DXC Technology Co | TERADATA vs. Sunny Optical Technology | TERADATA vs. MAVEN WIRELESS SWEDEN |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |