Correlation Between Teradata Corp and Informatica

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

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

Diversification Opportunities for Teradata Corp and Informatica

0.72

Correlation Coefficient

Teradata Corp  Informatica

Poor diversification

The 3 months correlation between Teradata and Informatica is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Teradata Corp and Informatica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Informatica and Teradata Corp 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 Teradata Corp are associated (or correlated) with Informatica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Informatica has no effect on the direction of Teradata Corp i.e., Teradata Corp and Informatica go up and down completely randomly.

Pair Corralation between Teradata Corp and Informatica

Considering the 90-day investment horizon Teradata Corp is expected to generate 1.04 times more return on investment than Informatica. However, Teradata Corp is 1.04 times more volatile than Informatica. It trades about 0.1 of its potential returns per unit of risk. Informatica is currently generating about 0.07 per unit of risk. If you would invest  2,792  in Teradata Corp on September 4, 2024 and sell it today you would earn a total of  377.00  from holding Teradata Corp or generate 13.5% return on investment over 90 days.

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

Teradata Corp  vs.  Informatica

Teradata Corp

Risk-Adjusted Performance

7 of 100

OK

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

Informatica

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Informatica are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Informatica may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Teradata Corp and Informatica

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

The idea behind Teradata Corp and Informatica 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.