Correlation Between Onto Innovation and Teradyne
Can any of the company-specific risk be diversified away by investing in both Onto Innovation 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 Onto Innovation and Teradyne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Onto Innovation and Teradyne, you can compare the effects of market volatilities on Onto Innovation 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 Onto Innovation with a short position of Teradyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Onto Innovation and Teradyne.
Diversification Opportunities for Onto Innovation and Teradyne
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Onto and Teradyne is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Onto Innovation and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne and Onto Innovation 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 Onto Innovation 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 Onto Innovation i.e., Onto Innovation and Teradyne go up and down completely randomly.
Pair Corralation between Onto Innovation and Teradyne
Given the investment horizon of 90 days Onto Innovation is expected to under-perform the Teradyne. In addition to that, Onto Innovation is 1.15 times more volatile than Teradyne. It trades about -0.23 of its total potential returns per unit of risk. Teradyne is currently generating about -0.24 per unit of volatility. If you would invest 12,443 in Teradyne on August 24, 2024 and sell it today you would lose (1,891) from holding Teradyne or give up 15.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Onto Innovation vs. Teradyne
Performance |
| Timeline |
| Onto Innovation |
| Teradyne |
Onto Innovation and Teradyne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Onto Innovation and Teradyne
The main advantage of trading using opposite Onto Innovation and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Onto Innovation 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.| Onto Innovation vs. Camtek | Onto Innovation vs. Amtech Systems | Onto Innovation vs. Veeco Instruments | Onto Innovation vs. Ichor Holdings |
| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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