Correlation Between NetApp and Teradata Corp
Can any of the company-specific risk be diversified away by investing in both NetApp and Teradata Corp 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 NetApp and Teradata Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NetApp Inc and Teradata Corp, you can compare the effects of market volatilities on NetApp and Teradata Corp 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 NetApp with a short position of Teradata Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of NetApp and Teradata Corp.
Diversification Opportunities for NetApp and Teradata Corp
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NetApp and Teradata is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding NetApp Inc and Teradata Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradata Corp and NetApp 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 NetApp Inc are associated (or correlated) with Teradata Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradata Corp has no effect on the direction of NetApp i.e., NetApp and Teradata Corp go up and down completely randomly.
Pair Corralation between NetApp and Teradata Corp
Assuming the 90 days horizon NetApp is expected to generate 1.94 times less return on investment than Teradata Corp. In addition to that, NetApp is 2.35 times more volatile than Teradata Corp. It trades about 0.08 of its total potential returns per unit of risk. Teradata Corp is currently generating about 0.36 per unit of volatility. If you would invest 2,780 in Teradata Corp on September 12, 2024 and sell it today you would earn a total of 260.00 from holding Teradata Corp or generate 9.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
NetApp Inc vs. Teradata Corp
Performance |
| Timeline |
| NetApp Inc |
| Teradata Corp |
NetApp and Teradata Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NetApp and Teradata Corp
The main advantage of trading using opposite NetApp and Teradata Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NetApp position performs unexpectedly, Teradata Corp 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 Corp will offset losses from the drop in Teradata Corp's long position.| NetApp vs. Pure Storage | NetApp vs. Teradata Corp | NetApp vs. Superior Plus Corp | NetApp vs. Origin Agritech |
| Teradata Corp vs. United Natural Foods | Teradata Corp vs. Soken Chemical Engineering | Teradata Corp vs. Food Life Companies | Teradata Corp vs. HF FOODS 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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