Correlation Between Teradyne and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Teradyne and NETGEAR 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 NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and NETGEAR, you can compare the effects of market volatilities on Teradyne and NETGEAR 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 NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and NETGEAR.
Diversification Opportunities for Teradyne and NETGEAR
Excellent diversification
The 3 months correlation between Teradyne and NETGEAR is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR 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 NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of Teradyne i.e., Teradyne and NETGEAR go up and down completely randomly.
Pair Corralation between Teradyne and NETGEAR
Considering the 90-day investment horizon Teradyne is expected to generate 1.16 times less return on investment than NETGEAR. But when comparing it to its historical volatility, Teradyne is 1.21 times less risky than NETGEAR. It trades about 0.03 of its potential returns per unit of risk. NETGEAR is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,066 in NETGEAR on August 30, 2024 and sell it today you would earn a total of 338.00 from holding NETGEAR or generate 16.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradyne vs. NETGEAR
Performance |
| Timeline |
| Teradyne |
| NETGEAR |
Teradyne and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and NETGEAR
The main advantage of trading using opposite Teradyne and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, NETGEAR 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 NETGEAR will offset losses from the drop in NETGEAR's long position.| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
| NETGEAR vs. KVH Industries | NETGEAR vs. Merck Company | NETGEAR vs. Pharvaris BV | NETGEAR vs. Brinker International |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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