Correlation Between Teradyne and Veeco Instruments
Can any of the company-specific risk be diversified away by investing in both Teradyne and Veeco Instruments 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 Veeco Instruments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and Veeco Instruments, you can compare the effects of market volatilities on Teradyne and Veeco Instruments 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 Veeco Instruments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Veeco Instruments.
Diversification Opportunities for Teradyne and Veeco Instruments
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Teradyne and Veeco is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Veeco Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veeco Instruments 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 Veeco Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veeco Instruments has no effect on the direction of Teradyne i.e., Teradyne and Veeco Instruments go up and down completely randomly.
Pair Corralation between Teradyne and Veeco Instruments
Considering the 90-day investment horizon Teradyne is expected to generate 1.03 times more return on investment than Veeco Instruments. However, Teradyne is 1.03 times more volatile than Veeco Instruments. It trades about -0.07 of its potential returns per unit of risk. Veeco Instruments is currently generating about -0.1 per unit of risk. If you would invest 14,509 in Teradyne on August 24, 2024 and sell it today you would lose (3,957) from holding Teradyne or give up 27.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradyne vs. Veeco Instruments
Performance |
| Timeline |
| Teradyne |
| Veeco Instruments |
Teradyne and Veeco Instruments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and Veeco Instruments
The main advantage of trading using opposite Teradyne and Veeco Instruments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, Veeco Instruments 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 Veeco Instruments will offset losses from the drop in Veeco Instruments' long position.| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
| Veeco Instruments vs. NVE Corporation | Veeco Instruments vs. Photronics | Veeco Instruments vs. Kulicke and Soffa | Veeco Instruments vs. Alvarium Tiedemann Holdings |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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