Correlation Between Teradyne and Nokia Corp
Can any of the company-specific risk be diversified away by investing in both Teradyne and Nokia 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 Nokia Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and Nokia Corp ADR, you can compare the effects of market volatilities on Teradyne and Nokia 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 Nokia Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Nokia Corp.
Diversification Opportunities for Teradyne and Nokia Corp
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Teradyne and Nokia is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Nokia Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia Corp ADR 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 Nokia Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokia Corp ADR has no effect on the direction of Teradyne i.e., Teradyne and Nokia Corp go up and down completely randomly.
Pair Corralation between Teradyne and Nokia Corp
Considering the 90-day investment horizon Teradyne is expected to generate 0.93 times more return on investment than Nokia Corp. However, Teradyne is 1.07 times less risky than Nokia Corp. It trades about -0.06 of its potential returns per unit of risk. Nokia Corp ADR is currently generating about -0.27 per unit of risk. If you would invest 11,175 in Teradyne on August 26, 2024 and sell it today you would lose (354.00) from holding Teradyne or give up 3.17% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Teradyne vs. Nokia Corp ADR
Performance |
Timeline |
Teradyne |
Nokia Corp ADR |
Teradyne and Nokia Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Teradyne and Nokia Corp
The main advantage of trading using opposite Teradyne and Nokia Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, Nokia 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 Nokia Corp will offset losses from the drop in Nokia Corp's long position.The idea behind Teradyne and Nokia Corp ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Nokia Corp vs. Hewlett Packard Enterprise | Nokia Corp vs. Juniper Networks | Nokia Corp vs. Ciena Corp | Nokia Corp vs. Motorola 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |