Correlation Between Teradyne and Radware
Can any of the company-specific risk be diversified away by investing in both Teradyne and Radware 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 Radware into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and Radware, you can compare the effects of market volatilities on Teradyne and Radware 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 Radware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Radware.
Diversification Opportunities for Teradyne and Radware
Very good diversification
The 3 months correlation between Teradyne and Radware is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Radware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radware 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 Radware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radware has no effect on the direction of Teradyne i.e., Teradyne and Radware go up and down completely randomly.
Pair Corralation between Teradyne and Radware
Considering the 90-day investment horizon Teradyne is expected to under-perform the Radware. In addition to that, Teradyne is 1.12 times more volatile than Radware. It trades about -0.05 of its total potential returns per unit of risk. Radware is currently generating about 0.07 per unit of volatility. If you would invest 1,943 in Radware on August 31, 2024 and sell it today you would earn a total of 433.00 from holding Radware or generate 22.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradyne vs. Radware
Performance |
| Timeline |
| Teradyne |
| Radware |
Teradyne and Radware Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and Radware
The main advantage of trading using opposite Teradyne and Radware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, Radware 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 Radware will offset losses from the drop in Radware's long position.| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
| Radware vs. Evertec | Radware vs. Consensus Cloud Solutions | Radware vs. Global Blue Group | Radware vs. CSG Systems 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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