Correlation Between Teradata Corp and Gruppo MutuiOnline

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

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

Diversification Opportunities for Teradata Corp and Gruppo MutuiOnline

0.21

Correlation Coefficient

Teradata Corp  Gruppo MutuiOnline

Modest diversification

The 3 months correlation between Teradata and Gruppo is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Teradata Corp and Gruppo MutuiOnline SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gruppo MutuiOnline SpA and Teradata Corp 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 Teradata Corp are associated (or correlated) with Gruppo MutuiOnline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gruppo MutuiOnline SpA has no effect on the direction of Teradata Corp i.e., Teradata Corp and Gruppo MutuiOnline go up and down completely randomly.

Pair Corralation between Teradata Corp and Gruppo MutuiOnline

Assuming the 90 days trading horizon Teradata Corp is expected to generate 75.26 times less return on investment than Gruppo MutuiOnline. But when comparing it to its historical volatility, Teradata Corp is 10.04 times less risky than Gruppo MutuiOnline. It trades about 0.01 of its potential returns per unit of risk. Gruppo MutuiOnline SpA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,576  in Gruppo MutuiOnline SpA on September 14, 2024 and sell it today you would earn a total of  1,229  from holding Gruppo MutuiOnline SpA or generate 47.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	80.39%
Values	Daily Returns

Teradata Corp  vs.  Gruppo MutuiOnline SpA

Teradata Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Teradata Corp are ranked lower than 8 (%) 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.

Gruppo MutuiOnline SpA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gruppo MutuiOnline SpA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gruppo MutuiOnline unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Teradata Corp and Gruppo MutuiOnline

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

The idea behind Teradata Corp and Gruppo MutuiOnline SpA 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.