Correlation Between Globalfoundries and Teradyne

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

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

Diversification Opportunities for Globalfoundries and Teradyne

0.17

Correlation Coefficient

Globalfoundries  Teradyne

Average diversification

The 3 months correlation between Globalfoundries and Teradyne is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne and Globalfoundries 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 Globalfoundries 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 Globalfoundries i.e., Globalfoundries and Teradyne go up and down completely randomly.

Pair Corralation between Globalfoundries and Teradyne

Considering the 90-day investment horizon Globalfoundries is expected to under-perform the Teradyne. In addition to that, Globalfoundries is 1.04 times more volatile than Teradyne. It trades about -0.1 of its total potential returns per unit of risk. Teradyne is currently generating about -0.05 per unit of volatility. If you would invest  11,677  in Teradyne on December 4, 2024 and sell it today you would lose (1,099) from holding Teradyne or give up 9.41% of portfolio value over 90 days.

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

Globalfoundries  vs.  Teradyne

Globalfoundries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Globalfoundries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Teradyne

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teradyne has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Globalfoundries and Teradyne

The main advantage of trading using opposite Globalfoundries and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalfoundries 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 Globalfoundries 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.