Correlation Between MKS Instruments and Teledyne Technologies
Can any of the company-specific risk be diversified away by investing in both MKS Instruments 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 MKS Instruments and Teledyne Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MKS Instruments and Teledyne Technologies Incorporated, you can compare the effects of market volatilities on MKS Instruments 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 MKS Instruments with a short position of Teledyne Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of MKS Instruments and Teledyne Technologies.
Diversification Opportunities for MKS Instruments and Teledyne Technologies
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MKS and Teledyne is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding MKS Instruments and Teledyne Technologies Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teledyne Technologies and MKS Instruments 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 MKS Instruments 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 MKS Instruments i.e., MKS Instruments and Teledyne Technologies go up and down completely randomly.
Pair Corralation between MKS Instruments and Teledyne Technologies
Assuming the 90 days horizon MKS Instruments is expected to under-perform the Teledyne Technologies. In addition to that, MKS Instruments is 2.25 times more volatile than Teledyne Technologies Incorporated. It trades about -0.06 of its total potential returns per unit of risk. Teledyne Technologies Incorporated is currently generating about -0.08 per unit of volatility. If you would invest 45,510 in Teledyne Technologies Incorporated on September 12, 2024 and sell it today you would lose (840.00) from holding Teledyne Technologies Incorporated or give up 1.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
MKS Instruments vs. Teledyne Technologies Incorpor
Performance |
| Timeline |
| MKS Instruments |
| Teledyne Technologies |
MKS Instruments and Teledyne Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MKS Instruments and Teledyne Technologies
The main advantage of trading using opposite MKS Instruments and Teledyne Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MKS Instruments 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.| MKS Instruments vs. HEXAGON AB ADR1 | MKS Instruments vs. Superior Plus Corp | MKS Instruments vs. SIVERS SEMICONDUCTORS AB | MKS Instruments vs. NorAm Drilling AS |
| Teledyne Technologies vs. HEXAGON AB ADR1 | Teledyne Technologies vs. Superior Plus Corp | Teledyne Technologies vs. SIVERS SEMICONDUCTORS AB | Teledyne Technologies vs. NorAm Drilling AS |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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