Correlation Between Teledyne Technologies and Coherent
Can any of the company-specific risk be diversified away by investing in both Teledyne Technologies and Coherent 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 Teledyne Technologies and Coherent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teledyne Technologies Incorporated and Coherent, you can compare the effects of market volatilities on Teledyne Technologies and Coherent 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 Teledyne Technologies with a short position of Coherent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teledyne Technologies and Coherent.
Diversification Opportunities for Teledyne Technologies and Coherent
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Teledyne and Coherent is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Teledyne Technologies Incorpor and Coherent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coherent and Teledyne Technologies 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 Teledyne Technologies Incorporated are associated (or correlated) with Coherent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coherent has no effect on the direction of Teledyne Technologies i.e., Teledyne Technologies and Coherent go up and down completely randomly.
Pair Corralation between Teledyne Technologies and Coherent
Considering the 90-day investment horizon Teledyne Technologies is expected to generate 3.29 times less return on investment than Coherent. But when comparing it to its historical volatility, Teledyne Technologies Incorporated is 3.08 times less risky than Coherent. It trades about 0.13 of its potential returns per unit of risk. Coherent is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 5,903 in Coherent on August 24, 2024 and sell it today you would earn a total of 4,669 from holding Coherent or generate 79.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teledyne Technologies Incorpor vs. Coherent
Performance |
| Timeline |
| Teledyne Technologies |
| Coherent |
Teledyne Technologies and Coherent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teledyne Technologies and Coherent
The main advantage of trading using opposite Teledyne Technologies and Coherent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teledyne Technologies position performs unexpectedly, Coherent 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 Coherent will offset losses from the drop in Coherent's long position.| Teledyne Technologies vs. Vontier Corp | Teledyne Technologies vs. ESCO Technologies | Teledyne Technologies vs. MKS Instruments | Teledyne Technologies vs. Sensata Technologies Holding |
| Coherent vs. MKS Instruments | Coherent vs. IPG Photonics | Coherent vs. Cognex | Coherent vs. Lumentum Holdings |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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