Correlation Between Teradyne and Ciena Corp
Can any of the company-specific risk be diversified away by investing in both Teradyne and Ciena Corp 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 Ciena Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and Ciena Corp, you can compare the effects of market volatilities on Teradyne and Ciena Corp 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 Ciena Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Ciena Corp.
Diversification Opportunities for Teradyne and Ciena Corp
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Teradyne and Ciena is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Ciena Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ciena 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 Ciena Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ciena Corp has no effect on the direction of Teradyne i.e., Teradyne and Ciena Corp go up and down completely randomly.
Pair Corralation between Teradyne and Ciena Corp
Considering the 90-day investment horizon Teradyne is expected to generate 1.81 times less return on investment than Ciena Corp. In addition to that, Teradyne is 1.21 times more volatile than Ciena Corp. It trades about 0.04 of its total potential returns per unit of risk. Ciena Corp is currently generating about 0.08 per unit of volatility. If you would invest 4,522 in Ciena Corp on August 24, 2024 and sell it today you would earn a total of 2,295 from holding Ciena Corp or generate 50.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Teradyne vs. Ciena Corp
Performance |
| Timeline |
| Teradyne |
| Ciena Corp |
Teradyne and Ciena Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and Ciena Corp
The main advantage of trading using opposite Teradyne and Ciena Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, Ciena Corp 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 Ciena Corp will offset losses from the drop in Ciena Corp's long position.| Teradyne vs. Amtech Systems | Teradyne vs. Veeco Instruments | Teradyne vs. Ichor Holdings | Teradyne vs. Axcelis Technologies |
| Ciena Corp vs. Hewlett Packard Enterprise | Ciena Corp vs. Juniper Networks | Ciena Corp vs. Cisco Systems | Ciena Corp vs. Viavi Solutions |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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