Correlation Between Hawkins and Teradyne
Can any of the company-specific risk be diversified away by investing in both Hawkins 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 Hawkins and Teradyne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawkins and Teradyne, you can compare the effects of market volatilities on Hawkins 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 Hawkins with a short position of Teradyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawkins and Teradyne.
Diversification Opportunities for Hawkins and Teradyne
Average diversification
The 3 months correlation between Hawkins and Teradyne is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hawkins and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne and Hawkins 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 Hawkins 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 Hawkins i.e., Hawkins and Teradyne go up and down completely randomly.
Pair Corralation between Hawkins and Teradyne
Given the investment horizon of 90 days Hawkins is expected to generate 1.41 times more return on investment than Teradyne. However, Hawkins is 1.41 times more volatile than Teradyne. It trades about 0.43 of its potential returns per unit of risk. Teradyne is currently generating about 0.1 per unit of risk. If you would invest 10,675 in Hawkins on September 1, 2024 and sell it today you would earn a total of 2,776 from holding Hawkins or generate 26.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawkins vs. Teradyne
Performance |
| Timeline |
| Hawkins |
| Teradyne |
Hawkins and Teradyne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawkins and Teradyne
The main advantage of trading using opposite Hawkins and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawkins 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.| Hawkins vs. H B Fuller | Hawkins vs. Minerals Technologies | Hawkins vs. Quaker Chemical | Hawkins vs. Oil Dri |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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