Correlation Between Teradyne and Tigo Energy
Can any of the company-specific risk be diversified away by investing in both Teradyne and Tigo Energy 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 Tigo Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and Tigo Energy, you can compare the effects of market volatilities on Teradyne and Tigo Energy 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 Tigo Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Tigo Energy.
Diversification Opportunities for Teradyne and Tigo Energy
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Teradyne and Tigo is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Tigo Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tigo Energy 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 Tigo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tigo Energy has no effect on the direction of Teradyne i.e., Teradyne and Tigo Energy go up and down completely randomly.
Pair Corralation between Teradyne and Tigo Energy
Considering the 90-day investment horizon Teradyne is expected to generate 0.5 times more return on investment than Tigo Energy. However, Teradyne is 2.01 times less risky than Tigo Energy. It trades about 0.0 of its potential returns per unit of risk. Tigo Energy is currently generating about -0.16 per unit of risk. If you would invest 11,133 in Teradyne on August 28, 2024 and sell it today you would lose (66.00) from holding Teradyne or give up 0.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradyne vs. Tigo Energy
Performance |
| Timeline |
| Teradyne |
| Tigo Energy |
Teradyne and Tigo Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and Tigo Energy
The main advantage of trading using opposite Teradyne and Tigo Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, Tigo Energy 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 Tigo Energy will offset losses from the drop in Tigo Energy's long position.| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
| Tigo Energy vs. CenterPoint Energy | Tigo Energy vs. NRG Energy | Tigo Energy vs. Black Hills | Tigo Energy vs. Everspin Technologies |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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