Correlation Between Jacquet Metal and Teradata Corp

Can any of the company-specific risk be diversified away by investing in both Jacquet Metal and Teradata Corp 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 Jacquet Metal and Teradata Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jacquet Metal Service and Teradata Corp, you can compare the effects of market volatilities on Jacquet Metal and Teradata Corp 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 Jacquet Metal with a short position of Teradata Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacquet Metal and Teradata Corp.

Diversification Opportunities for Jacquet Metal and Teradata Corp

0.77

Correlation Coefficient

Jacquet Metal  Teradata Corp

Poor diversification

The 3 months correlation between Jacquet and Teradata is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Jacquet Metal Service and Teradata Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradata Corp and Jacquet Metal 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 Jacquet Metal Service are associated (or correlated) with Teradata Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradata Corp has no effect on the direction of Jacquet Metal i.e., Jacquet Metal and Teradata Corp go up and down completely randomly.

Pair Corralation between Jacquet Metal and Teradata Corp

Assuming the 90 days trading horizon Jacquet Metal is expected to generate 1.15 times less return on investment than Teradata Corp. But when comparing it to its historical volatility, Jacquet Metal Service is 1.41 times less risky than Teradata Corp. It trades about 0.15 of its potential returns per unit of risk. Teradata Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,763  in Teradata Corp on September 12, 2024 and sell it today you would earn a total of  491.00  from holding Teradata Corp or generate 17.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Jacquet Metal Service  vs.  Teradata Corp

Jacquet Metal Service

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jacquet Metal Service are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Jacquet Metal unveiled solid returns over the last few months and may actually be approaching a breakup point.

Teradata Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Teradata Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Teradata Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jacquet Metal and Teradata Corp

The main advantage of trading using opposite Jacquet Metal and Teradata Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacquet Metal position performs unexpectedly, Teradata Corp 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 Teradata Corp will offset losses from the drop in Teradata Corp's long position.

The idea behind Jacquet Metal Service and Teradata Corp 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.