Correlation Between Teradyne and Hawkins
Can any of the company-specific risk be diversified away by investing in both Teradyne and Hawkins 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 Hawkins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and Hawkins, you can compare the effects of market volatilities on Teradyne and Hawkins 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 Hawkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Hawkins.
Diversification Opportunities for Teradyne and Hawkins
Average diversification
The 3 months correlation between Teradyne and Hawkins is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of Teradyne i.e., Teradyne and Hawkins go up and down completely randomly.
Pair Corralation between Teradyne and Hawkins
Considering the 90-day investment horizon Teradyne is expected to generate 6.02 times less return on investment than Hawkins. But when comparing it to its historical volatility, Teradyne is 1.41 times less risky than Hawkins. It trades about 0.1 of its potential returns per unit of risk. Hawkins is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 10,675 in Hawkins on September 1, 2024 and sell it today you would earn a total of 2,776 from holding Hawkins or generate 26.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradyne vs. Hawkins
Performance |
| Timeline |
| Teradyne |
| Hawkins |
Teradyne and Hawkins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and Hawkins
The main advantage of trading using opposite Teradyne and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, Hawkins 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 Hawkins will offset losses from the drop in Hawkins' long position.| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
| Hawkins vs. H B Fuller | Hawkins vs. Minerals Technologies | Hawkins vs. Quaker Chemical | Hawkins vs. Oil Dri |
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.
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