Correlation Between Teradyne and Wabash National
Can any of the company-specific risk be diversified away by investing in both Teradyne and Wabash National 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 Wabash National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and Wabash National, you can compare the effects of market volatilities on Teradyne and Wabash National 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 Wabash National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Wabash National.
Diversification Opportunities for Teradyne and Wabash National
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Teradyne and Wabash is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National 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 Wabash National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wabash National has no effect on the direction of Teradyne i.e., Teradyne and Wabash National go up and down completely randomly.
Pair Corralation between Teradyne and Wabash National
Considering the 90-day investment horizon Teradyne is expected to generate 1.03 times more return on investment than Wabash National. However, Teradyne is 1.03 times more volatile than Wabash National. It trades about 0.04 of its potential returns per unit of risk. Wabash National is currently generating about 0.0 per unit of risk. If you would invest 8,675 in Teradyne on September 19, 2024 and sell it today you would earn a total of 4,126 from holding Teradyne or generate 47.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradyne vs. Wabash National
Performance |
| Timeline |
| Teradyne |
| Wabash National |
Teradyne and Wabash National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and Wabash National
The main advantage of trading using opposite Teradyne and Wabash National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, Wabash National 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 Wabash National will offset losses from the drop in Wabash National's long position.The idea behind Teradyne and Wabash National pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Wabash National vs. Aquagold International | Wabash National vs. Thrivent High Yield | Wabash National vs. Morningstar Unconstrained Allocation | Wabash National vs. Via Renewables |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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