Correlation Between Teradyne and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both Teradyne and Citizens Financial 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 Citizens Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and Citizens Financial Group,, you can compare the effects of market volatilities on Teradyne and Citizens Financial 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 Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Citizens Financial.
Diversification Opportunities for Teradyne and Citizens Financial
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Teradyne and Citizens is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Citizens Financial Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Group, 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 Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial Group, has no effect on the direction of Teradyne i.e., Teradyne and Citizens Financial go up and down completely randomly.
Pair Corralation between Teradyne and Citizens Financial
Considering the 90-day investment horizon Teradyne is expected to generate 1.33 times less return on investment than Citizens Financial. In addition to that, Teradyne is 4.53 times more volatile than Citizens Financial Group,. It trades about 0.01 of its total potential returns per unit of risk. Citizens Financial Group, is currently generating about 0.09 per unit of volatility. If you would invest 2,412 in Citizens Financial Group, on December 4, 2024 and sell it today you would earn a total of 234.00 from holding Citizens Financial Group, or generate 9.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 40.08% |
| Values | Daily Returns |
Teradyne vs. Citizens Financial Group,
Performance |
| Timeline |
| Teradyne |
| Citizens Financial Group, |
Teradyne and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and Citizens Financial
The main advantage of trading using opposite Teradyne and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, Citizens Financial 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 Citizens Financial will offset losses from the drop in Citizens Financial's long position.| Teradyne vs. IPG Photonics | ||
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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