Correlation Between Cepton and Teledyne Technologies
Can any of the company-specific risk be diversified away by investing in both Cepton and Teledyne Technologies 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 Cepton and Teledyne Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cepton Inc and Teledyne Technologies Incorporated, you can compare the effects of market volatilities on Cepton and Teledyne Technologies 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 Cepton with a short position of Teledyne Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cepton and Teledyne Technologies.
Diversification Opportunities for Cepton and Teledyne Technologies
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cepton and Teledyne is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cepton Inc and Teledyne Technologies Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teledyne Technologies and Cepton 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 Cepton Inc are associated (or correlated) with Teledyne Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teledyne Technologies has no effect on the direction of Cepton i.e., Cepton and Teledyne Technologies go up and down completely randomly.
Pair Corralation between Cepton and Teledyne Technologies
Given the investment horizon of 90 days Cepton Inc is expected to under-perform the Teledyne Technologies. In addition to that, Cepton is 2.82 times more volatile than Teledyne Technologies Incorporated. It trades about 0.0 of its total potential returns per unit of risk. Teledyne Technologies Incorporated is currently generating about 0.05 per unit of volatility. If you would invest 41,739 in Teledyne Technologies Incorporated on September 4, 2024 and sell it today you would earn a total of 6,113 from holding Teledyne Technologies Incorporated or generate 14.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cepton Inc vs. Teledyne Technologies Incorpor
Performance |
| Timeline |
| Cepton Inc |
| Teledyne Technologies |
Cepton and Teledyne Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cepton and Teledyne Technologies
The main advantage of trading using opposite Cepton and Teledyne Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cepton position performs unexpectedly, Teledyne Technologies 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 Teledyne Technologies will offset losses from the drop in Teledyne Technologies' long position.The idea behind Cepton Inc and Teledyne Technologies Incorporated 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.| Teledyne Technologies vs. Vontier Corp | Teledyne Technologies vs. ESCO Technologies | Teledyne Technologies vs. MKS Instruments | Teledyne Technologies vs. Sensata Technologies Holding |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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