Correlation Between Teradyne and Lam Research
Can any of the company-specific risk be diversified away by investing in both Teradyne and Lam Research 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 Lam Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and Lam Research, you can compare the effects of market volatilities on Teradyne and Lam Research 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 Lam Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Lam Research.
Diversification Opportunities for Teradyne and Lam Research
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Teradyne and Lam is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Lam Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lam Research 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 Lam Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lam Research has no effect on the direction of Teradyne i.e., Teradyne and Lam Research go up and down completely randomly.
Pair Corralation between Teradyne and Lam Research
Assuming the 90 days horizon Teradyne is expected to generate 1.29 times less return on investment than Lam Research. In addition to that, Teradyne is 1.23 times more volatile than Lam Research. It trades about 0.02 of its total potential returns per unit of risk. Lam Research is currently generating about 0.03 per unit of volatility. If you would invest 6,098 in Lam Research on August 29, 2024 and sell it today you would earn a total of 917.00 from holding Lam Research or generate 15.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.7% |
| Values | Daily Returns |
Teradyne vs. Lam Research
Performance |
| Timeline |
| Teradyne |
| Lam Research |
Teradyne and Lam Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and Lam Research
The main advantage of trading using opposite Teradyne and Lam Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, Lam Research 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 Lam Research will offset losses from the drop in Lam Research's long position.| Teradyne vs. Eidesvik Offshore ASA | Teradyne vs. UPDATE SOFTWARE | Teradyne vs. EIDESVIK OFFSHORE NK | Teradyne vs. Virtus Investment Partners |
| Lam Research vs. KLA Corporation | Lam Research vs. Superior Plus Corp | Lam Research vs. NMI Holdings | Lam Research vs. SIVERS SEMICONDUCTORS AB |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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