Correlation Between Teledyne Technologies and Trimble
Can any of the company-specific risk be diversified away by investing in both Teledyne Technologies and Trimble 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 Trimble 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 Trimble, you can compare the effects of market volatilities on Teledyne Technologies and Trimble 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 Trimble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teledyne Technologies and Trimble.
Diversification Opportunities for Teledyne Technologies and Trimble
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Teledyne and Trimble is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Teledyne Technologies Incorpor and Trimble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trimble 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 Trimble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trimble has no effect on the direction of Teledyne Technologies i.e., Teledyne Technologies and Trimble go up and down completely randomly.
Pair Corralation between Teledyne Technologies and Trimble
Considering the 90-day investment horizon Teledyne Technologies is expected to generate 1.9 times less return on investment than Trimble. But when comparing it to its historical volatility, Teledyne Technologies Incorporated is 1.38 times less risky than Trimble. It trades about 0.03 of its potential returns per unit of risk. Trimble is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5,606 in Trimble on November 2, 2024 and sell it today you would earn a total of 1,922 from holding Trimble or generate 34.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teledyne Technologies Incorpor vs. Trimble
Performance |
| Timeline |
| Teledyne Technologies |
| Trimble |
Teledyne Technologies and Trimble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teledyne Technologies and Trimble
The main advantage of trading using opposite Teledyne Technologies and Trimble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teledyne Technologies position performs unexpectedly, Trimble 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 Trimble will offset losses from the drop in Trimble's long position.| Teledyne Technologies vs. Vontier Corp | Teledyne Technologies vs. ESCO Technologies | Teledyne Technologies vs. MKS Instruments | Teledyne Technologies vs. Sensata Technologies Holding |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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