Correlation Between Teradata Corp and Intel

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

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

Diversification Opportunities for Teradata Corp and Intel

-0.71

Correlation Coefficient

Teradata Corp  Intel

Pay attention - limited upside

The 3 months correlation between Teradata and Intel is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Teradata Corp and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Teradata Corp i.e., Teradata Corp and Intel go up and down completely randomly.

Pair Corralation between Teradata Corp and Intel

Assuming the 90 days horizon Teradata Corp is expected to generate 0.43 times more return on investment than Intel. However, Teradata Corp is 2.32 times less risky than Intel. It trades about 0.15 of its potential returns per unit of risk. Intel is currently generating about 0.04 per unit of risk. If you would invest  2,460  in Teradata Corp on October 20, 2024 and sell it today you would earn a total of  560.00  from holding Teradata Corp or generate 22.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Teradata Corp  vs.  Intel

Teradata Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teradata Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Teradata Corp is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Intel is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Teradata Corp and Intel

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

The idea behind Teradata Corp and Intel 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.