Correlation Between Teradyne and Woolworths Group
Can any of the company-specific risk be diversified away by investing in both Teradyne and Woolworths Group 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 Woolworths Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and Woolworths Group Limited, you can compare the effects of market volatilities on Teradyne and Woolworths Group 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 Woolworths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Woolworths Group.
Diversification Opportunities for Teradyne and Woolworths Group
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Teradyne and Woolworths is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Woolworths Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths Group 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 Woolworths Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths Group has no effect on the direction of Teradyne i.e., Teradyne and Woolworths Group go up and down completely randomly.
Pair Corralation between Teradyne and Woolworths Group
Assuming the 90 days horizon Teradyne is expected to under-perform the Woolworths Group. In addition to that, Teradyne is 1.75 times more volatile than Woolworths Group Limited. It trades about -0.12 of its total potential returns per unit of risk. Woolworths Group Limited is currently generating about -0.13 per unit of volatility. If you would invest 2,000 in Woolworths Group Limited on August 25, 2024 and sell it today you would lose (170.00) from holding Woolworths Group Limited or give up 8.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradyne vs. Woolworths Group Limited
Performance |
| Timeline |
| Teradyne |
| Woolworths Group |
Teradyne and Woolworths Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and Woolworths Group
The main advantage of trading using opposite Teradyne and Woolworths Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, Woolworths Group 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 Woolworths Group will offset losses from the drop in Woolworths Group's long position.| Teradyne vs. ASML HOLDING NY | Teradyne vs. Applied Materials | Teradyne vs. Lam Research | Teradyne vs. Superior Plus Corp |
| Woolworths Group vs. DIVERSIFIED ROYALTY | Woolworths Group vs. Chuangs China Investments | Woolworths Group vs. Harmony Gold Mining | Woolworths Group vs. GREENX METALS LTD |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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