Correlation Between BBB Foods and Teradyne
Can any of the company-specific risk be diversified away by investing in both BBB Foods 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 BBB Foods and Teradyne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and Teradyne, you can compare the effects of market volatilities on BBB Foods 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 BBB Foods with a short position of Teradyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and Teradyne.
Diversification Opportunities for BBB Foods and Teradyne
Very good diversification
The 3 months correlation between BBB and Teradyne is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne and BBB Foods 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 BBB Foods 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 BBB Foods i.e., BBB Foods and Teradyne go up and down completely randomly.
Pair Corralation between BBB Foods and Teradyne
Given the investment horizon of 90 days BBB Foods is expected to generate 0.93 times more return on investment than Teradyne. However, BBB Foods is 1.08 times less risky than Teradyne. It trades about 0.02 of its potential returns per unit of risk. Teradyne is currently generating about -0.05 per unit of risk. If you would invest 2,724 in BBB Foods on August 29, 2024 and sell it today you would earn a total of 98.00 from holding BBB Foods or generate 3.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBB Foods vs. Teradyne
Performance |
| Timeline |
| BBB Foods |
| Teradyne |
BBB Foods and Teradyne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and Teradyne
The main advantage of trading using opposite BBB Foods and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods 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.| BBB Foods vs. BJs Wholesale Club | BBB Foods vs. Dollar General | BBB Foods vs. Dollar Tree | BBB Foods vs. Target |
| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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