Correlation Between Teledyne Technologies and Itron

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

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

Diversification Opportunities for Teledyne Technologies and Itron

-0.21

Correlation Coefficient

Teledyne Technologies  Itron

Very good diversification

The 3 months correlation between Teledyne and Itron is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Teledyne Technologies Incorpor and Itron Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itron Inc and Teledyne Technologies 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 Teledyne Technologies Incorporated are associated (or correlated) with Itron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itron Inc has no effect on the direction of Teledyne Technologies i.e., Teledyne Technologies and Itron go up and down completely randomly.

Pair Corralation between Teledyne Technologies and Itron

Considering the 90-day investment horizon Teledyne Technologies Incorporated is expected to generate 0.66 times more return on investment than Itron. However, Teledyne Technologies Incorporated is 1.51 times less risky than Itron. It trades about 0.1 of its potential returns per unit of risk. Itron Inc is currently generating about -0.02 per unit of risk. If you would invest  47,144  in Teledyne Technologies Incorporated on December 27, 2024 and sell it today you would earn a total of  3,756  from holding Teledyne Technologies Incorporated or generate 7.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Teledyne Technologies Incorpor  vs.  Itron Inc

Teledyne Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Teledyne Technologies Incorporated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Teledyne Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Itron Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Itron Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Itron is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Teledyne Technologies and Itron

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

The idea behind Teledyne Technologies Incorporated and Itron Inc 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.