Correlation Between Maxeon Solar and Teradyne

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

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

Diversification Opportunities for Maxeon Solar and Teradyne

-0.39

Correlation Coefficient

Maxeon Solar  Teradyne

Very good diversification

The 3 months correlation between Maxeon and Teradyne is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Maxeon Solar Technologies and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne and Maxeon Solar 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 Maxeon Solar Technologies 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 Maxeon Solar i.e., Maxeon Solar and Teradyne go up and down completely randomly.

Pair Corralation between Maxeon Solar and Teradyne

Given the investment horizon of 90 days Maxeon Solar Technologies is expected to under-perform the Teradyne. In addition to that, Maxeon Solar is 3.94 times more volatile than Teradyne. It trades about -0.19 of its total potential returns per unit of risk. Teradyne is currently generating about 0.49 per unit of volatility. If you would invest  10,403  in Teradyne on September 19, 2024 and sell it today you would earn a total of  2,398  from holding Teradyne or generate 23.05% return on investment over 90 days.

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

Maxeon Solar Technologies  vs.  Teradyne

Maxeon Solar Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maxeon Solar Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Teradyne

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Maxeon Solar and Teradyne

The main advantage of trading using opposite Maxeon Solar and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maxeon Solar 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 Maxeon Solar Technologies 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.