Correlation Between American States and TERADATA
Can any of the company-specific risk be diversified away by investing in both American States 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 American States and TERADATA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American States Water and TERADATA, you can compare the effects of market volatilities on American States 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 American States with a short position of TERADATA. Check out your portfolio center. Please also check ongoing floating volatility patterns of American States and TERADATA.
Diversification Opportunities for American States and TERADATA
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and TERADATA is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding American States Water and TERADATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TERADATA and American States 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 American States Water 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 American States i.e., American States and TERADATA go up and down completely randomly.
Pair Corralation between American States and TERADATA
Assuming the 90 days horizon American States Water is expected to generate 0.66 times more return on investment than TERADATA. However, American States Water is 1.52 times less risky than TERADATA. It trades about 0.01 of its potential returns per unit of risk. TERADATA is currently generating about -0.06 per unit of risk. If you would invest 7,657 in American States Water on September 12, 2024 and sell it today you would earn a total of 48.00 from holding American States Water or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American States Water vs. TERADATA
Performance |
| Timeline |
| American States Water |
| TERADATA |
American States and TERADATA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American States and TERADATA
The main advantage of trading using opposite American States and TERADATA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American States 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.| American States vs. TERADATA | American States vs. Lamar Advertising | American States vs. Datang International Power | American States vs. Cass Information Systems |
| TERADATA vs. Safety Insurance Group | TERADATA vs. Major Drilling Group | TERADATA vs. Japan Tobacco | TERADATA vs. INSURANCE AUST GRP |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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