Correlation Between Cimpress and Teradyne

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

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

Diversification Opportunities for Cimpress and Teradyne

-0.46

Correlation Coefficient

Cimpress  Teradyne

Very good diversification

The 3 months correlation between Cimpress and Teradyne is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Cimpress NV and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne and Cimpress 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 Cimpress NV are associated (or correlated) with Teradyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradyne has no effect on the direction of Cimpress i.e., Cimpress and Teradyne go up and down completely randomly.

Pair Corralation between Cimpress and Teradyne

Given the investment horizon of 90 days Cimpress is expected to generate 9.68 times less return on investment than Teradyne. But when comparing it to its historical volatility, Cimpress NV is 1.24 times less risky than Teradyne. It trades about 0.03 of its potential returns per unit of risk. Teradyne is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  12,847  in Teradyne on October 23, 2024 and sell it today you would earn a total of  993.00  from holding Teradyne or generate 7.73% return on investment over 90 days.

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

Cimpress NV  vs.  Teradyne

Cimpress NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cimpress NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Cimpress is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Teradyne

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Teradyne are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Teradyne reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cimpress and Teradyne

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

The idea behind Cimpress NV and Teradyne 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.