Correlation Between Teradyne and KLA Tencor
Can any of the company-specific risk be diversified away by investing in both Teradyne and KLA Tencor 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 KLA Tencor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and KLA Tencor, you can compare the effects of market volatilities on Teradyne and KLA Tencor 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 KLA Tencor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and KLA Tencor.
Diversification Opportunities for Teradyne and KLA Tencor
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Teradyne and KLA is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and KLA Tencor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Tencor 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 KLA Tencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Tencor has no effect on the direction of Teradyne i.e., Teradyne and KLA Tencor go up and down completely randomly.
Pair Corralation between Teradyne and KLA Tencor
Considering the 90-day investment horizon Teradyne is expected to generate 1.92 times less return on investment than KLA Tencor. In addition to that, Teradyne is 1.17 times more volatile than KLA Tencor. It trades about 0.26 of its total potential returns per unit of risk. KLA Tencor is currently generating about 0.58 per unit of volatility. If you would invest 62,218 in KLA Tencor on October 20, 2024 and sell it today you would earn a total of 13,529 from holding KLA Tencor or generate 21.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradyne vs. KLA Tencor
Performance |
| Timeline |
| Teradyne |
| KLA Tencor |
Teradyne and KLA Tencor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and KLA Tencor
The main advantage of trading using opposite Teradyne and KLA Tencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, KLA Tencor 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 KLA Tencor will offset losses from the drop in KLA Tencor's long position.| Teradyne vs. First Solar | Teradyne vs. Sunrun Inc | Teradyne vs. Canadian Solar | Teradyne vs. SolarEdge Technologies |
| KLA Tencor vs. Applied Materials | KLA Tencor vs. ASML Holding NV | KLA Tencor vs. Axcelis Technologies | KLA Tencor vs. Teradyne |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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