Correlation Between Teradyne and Allegro Microsystems
Can any of the company-specific risk be diversified away by investing in both Teradyne and Allegro Microsystems 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 Teradyne and Allegro Microsystems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and Allegro Microsystems, you can compare the effects of market volatilities on Teradyne and Allegro Microsystems 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 Teradyne with a short position of Allegro Microsystems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Allegro Microsystems.
Diversification Opportunities for Teradyne and Allegro Microsystems
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Teradyne and Allegro is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Allegro Microsystems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegro Microsystems and Teradyne 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 Teradyne are associated (or correlated) with Allegro Microsystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegro Microsystems has no effect on the direction of Teradyne i.e., Teradyne and Allegro Microsystems go up and down completely randomly.
Pair Corralation between Teradyne and Allegro Microsystems
Considering the 90-day investment horizon Teradyne is expected to generate 0.89 times more return on investment than Allegro Microsystems. However, Teradyne is 1.12 times less risky than Allegro Microsystems. It trades about 0.03 of its potential returns per unit of risk. Allegro Microsystems is currently generating about 0.01 per unit of risk. If you would invest 10,366 in Teradyne on November 9, 2024 and sell it today you would earn a total of 1,041 from holding Teradyne or generate 10.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradyne vs. Allegro Microsystems
Performance |
| Timeline |
| Teradyne |
| Allegro Microsystems |
Teradyne and Allegro Microsystems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and Allegro Microsystems
The main advantage of trading using opposite Teradyne and Allegro Microsystems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, Allegro Microsystems 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 Allegro Microsystems will offset losses from the drop in Allegro Microsystems' long position.| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
| Allegro Microsystems vs. Synaptics Incorporated | Allegro Microsystems vs. Microchip Technology | Allegro Microsystems vs. Qorvo Inc | Allegro Microsystems vs. Monolithic Power Systems |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |