Correlation Between Jacquet Metal and TERADYNE

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

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

Diversification Opportunities for Jacquet Metal and TERADYNE

0.55

Correlation Coefficient

Jacquet Metal  TERADYNE

Very weak diversification

The 3 months correlation between Jacquet and TERADYNE is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Jacquet Metal Service and TERADYNE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TERADYNE and Jacquet Metal 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 Jacquet Metal Service 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 Jacquet Metal i.e., Jacquet Metal and TERADYNE go up and down completely randomly.

Pair Corralation between Jacquet Metal and TERADYNE

Assuming the 90 days horizon Jacquet Metal Service is expected to under-perform the TERADYNE. In addition to that, Jacquet Metal is 1.08 times more volatile than TERADYNE. It trades about -0.35 of its total potential returns per unit of risk. TERADYNE is currently generating about 0.31 per unit of volatility. If you would invest  12,098  in TERADYNE on October 22, 2024 and sell it today you would earn a total of  1,230  from holding TERADYNE or generate 10.17% return on investment over 90 days.

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

Jacquet Metal Service  vs.  TERADYNE

Jacquet Metal Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jacquet Metal Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

TERADYNE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TERADYNE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, TERADYNE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jacquet Metal and TERADYNE

The main advantage of trading using opposite Jacquet Metal and TERADYNE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacquet Metal 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 Jacquet Metal Service 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.