Correlation Between Heartland Express and TERADATA

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

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

Diversification Opportunities for Heartland Express and TERADATA

0.85

Correlation Coefficient

Heartland Express  TERADATA

Very poor diversification

The 3 months correlation between Heartland and TERADATA is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Express and TERADATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TERADATA and Heartland Express 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 Heartland Express are associated (or correlated) with TERADATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TERADATA has no effect on the direction of Heartland Express i.e., Heartland Express and TERADATA go up and down completely randomly.

Pair Corralation between Heartland Express and TERADATA

Assuming the 90 days horizon Heartland Express is expected to generate 0.92 times more return on investment than TERADATA. However, Heartland Express is 1.08 times less risky than TERADATA. It trades about -0.17 of its potential returns per unit of risk. TERADATA is currently generating about -0.27 per unit of risk. If you would invest  1,078  in Heartland Express on December 23, 2024 and sell it today you would lose (218.00) from holding Heartland Express or give up 20.22% of portfolio value over 90 days.

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

Heartland Express  vs.  TERADATA

Heartland Express

Risk-Adjusted Performance

Very Weak

Over the last 90 days Heartland Express has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

TERADATA

Risk-Adjusted Performance

Very Weak

Over the last 90 days TERADATA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic 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.

Pair Trading with Heartland Express and TERADATA

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

The idea behind Heartland Express and TERADATA 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.