Correlation Between Expeditors International and Teradata Corp

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

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

Diversification Opportunities for Expeditors International and Teradata Corp

-0.14

Correlation Coefficient

Expeditors International  Teradata Corp

Good diversification

The 3 months correlation between Expeditors and Teradata is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Expeditors International of and Teradata Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradata Corp and Expeditors International 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 Expeditors International of 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 Expeditors International i.e., Expeditors International and Teradata Corp go up and down completely randomly.

Pair Corralation between Expeditors International and Teradata Corp

Assuming the 90 days horizon Expeditors International of is expected to under-perform the Teradata Corp. But the stock apears to be less risky and, when comparing its historical volatility, Expeditors International of is 1.07 times less risky than Teradata Corp. The stock trades about -0.17 of its potential returns per unit of risk. The Teradata Corp is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,060  in Teradata Corp on October 12, 2024 and sell it today you would lose (40.00) from holding Teradata Corp or give up 1.31% of portfolio value over 90 days.

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

Expeditors International of  vs.  Teradata Corp

Expeditors International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Teradata Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Teradata Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Teradata Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Expeditors International and Teradata Corp

The main advantage of trading using opposite Expeditors International and Teradata Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expeditors International 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 Expeditors International of 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.