Correlation Between Teradyne and Steven Madden
Can any of the company-specific risk be diversified away by investing in both Teradyne and Steven Madden 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 Steven Madden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and Steven Madden, you can compare the effects of market volatilities on Teradyne and Steven Madden 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 Steven Madden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Steven Madden.
Diversification Opportunities for Teradyne and Steven Madden
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Teradyne and Steven is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Steven Madden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steven Madden 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 Steven Madden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steven Madden has no effect on the direction of Teradyne i.e., Teradyne and Steven Madden go up and down completely randomly.
Pair Corralation between Teradyne and Steven Madden
Considering the 90-day investment horizon Teradyne is expected to generate 0.94 times more return on investment than Steven Madden. However, Teradyne is 1.07 times less risky than Steven Madden. It trades about 0.1 of its potential returns per unit of risk. Steven Madden is currently generating about 0.04 per unit of risk. If you would invest 10,609 in Teradyne on September 1, 2024 and sell it today you would earn a total of 391.00 from holding Teradyne or generate 3.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradyne vs. Steven Madden
Performance |
| Timeline |
| Teradyne |
| Steven Madden |
Teradyne and Steven Madden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and Steven Madden
The main advantage of trading using opposite Teradyne and Steven Madden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, Steven Madden 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 Steven Madden will offset losses from the drop in Steven Madden's long position.| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
| Steven Madden vs. Deckers Outdoor | Steven Madden vs. On Holding | Steven Madden vs. Crocs Inc | Steven Madden vs. Designer Brands |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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