Correlation Between Teradyne and Leef Brands
Can any of the company-specific risk be diversified away by investing in both Teradyne and Leef Brands 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 Leef Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and Leef Brands, you can compare the effects of market volatilities on Teradyne and Leef Brands 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 Leef Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Leef Brands.
Diversification Opportunities for Teradyne and Leef Brands
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Teradyne and Leef is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Leef Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leef Brands 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 Leef Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leef Brands has no effect on the direction of Teradyne i.e., Teradyne and Leef Brands go up and down completely randomly.
Pair Corralation between Teradyne and Leef Brands
Considering the 90-day investment horizon Teradyne is expected to generate 16.94 times less return on investment than Leef Brands. But when comparing it to its historical volatility, Teradyne is 5.18 times less risky than Leef Brands. It trades about 0.01 of its potential returns per unit of risk. Leef Brands is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 41.00 in Leef Brands on December 4, 2024 and sell it today you would lose (24.00) from holding Leef Brands or give up 58.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradyne vs. Leef Brands
Performance |
| Timeline |
| Teradyne |
| Leef Brands |
Teradyne and Leef Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and Leef Brands
The main advantage of trading using opposite Teradyne and Leef Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, Leef Brands 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 Leef Brands will offset losses from the drop in Leef Brands' long position.| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
| Leef Brands vs. Entravision Communications | Leef Brands vs. Diageo PLC ADR | Leef Brands vs. Treasury Wine Estates | Leef Brands vs. PepsiCo |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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