Correlation Between Teradyne and American Lithium
Can any of the company-specific risk be diversified away by investing in both Teradyne and American Lithium 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 American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and American Lithium Corp, you can compare the effects of market volatilities on Teradyne and American Lithium 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 American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and American Lithium.
Diversification Opportunities for Teradyne and American Lithium
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Teradyne and American is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and American Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Corp 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 American Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Lithium Corp has no effect on the direction of Teradyne i.e., Teradyne and American Lithium go up and down completely randomly.
Pair Corralation between Teradyne and American Lithium
Considering the 90-day investment horizon Teradyne is expected to generate 0.26 times more return on investment than American Lithium. However, Teradyne is 3.85 times less risky than American Lithium. It trades about 0.35 of its potential returns per unit of risk. American Lithium Corp is currently generating about -0.35 per unit of risk. If you would invest 10,626 in Teradyne on September 14, 2024 and sell it today you would earn a total of 1,733 from holding Teradyne or generate 16.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradyne vs. American Lithium Corp
Performance |
| Timeline |
| Teradyne |
| American Lithium Corp |
Teradyne and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and American Lithium
The main advantage of trading using opposite Teradyne and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, American Lithium 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 American Lithium will offset losses from the drop in American Lithium's long position.| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
| American Lithium vs. Q2 Holdings | American Lithium vs. Teradyne | American Lithium vs. Kaltura | American Lithium vs. Asure Software |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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