Correlation Between Morgan Advanced and Teleflex Incorporated

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

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

Diversification Opportunities for Morgan Advanced and Teleflex Incorporated

0.82

Correlation Coefficient

Morgan Advanced  Teleflex Incorporated

Very poor diversification

The 3 months correlation between Morgan and Teleflex is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Advanced Materials and Teleflex Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teleflex Incorporated and Morgan Advanced 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 Morgan Advanced Materials are associated (or correlated) with Teleflex Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teleflex Incorporated has no effect on the direction of Morgan Advanced i.e., Morgan Advanced and Teleflex Incorporated go up and down completely randomly.

Pair Corralation between Morgan Advanced and Teleflex Incorporated

Assuming the 90 days horizon Morgan Advanced Materials is expected to generate 0.6 times more return on investment than Teleflex Incorporated. However, Morgan Advanced Materials is 1.68 times less risky than Teleflex Incorporated. It trades about -0.09 of its potential returns per unit of risk. Teleflex Incorporated is currently generating about -0.11 per unit of risk. If you would invest  325.00  in Morgan Advanced Materials on December 21, 2024 and sell it today you would lose (33.00) from holding Morgan Advanced Materials or give up 10.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Morgan Advanced Materials  vs.  Teleflex Incorporated

Morgan Advanced Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Morgan Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent 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.

Teleflex Incorporated

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teleflex Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Morgan Advanced and Teleflex Incorporated

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

The idea behind Morgan Advanced Materials and Teleflex Incorporated 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.