Correlation Between Teledyne Technologies and Mesa Laboratories

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Can any of the company-specific risk be diversified away by investing in both Teledyne Technologies and Mesa Laboratories 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 Mesa Laboratories 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 Mesa Laboratories, you can compare the effects of market volatilities on Teledyne Technologies and Mesa Laboratories 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 Mesa Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teledyne Technologies and Mesa Laboratories.

Diversification Opportunities for Teledyne Technologies and Mesa Laboratories

-0.59
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Teledyne and Mesa is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Teledyne Technologies Incorpor and Mesa Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesa Laboratories 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 Mesa Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesa Laboratories has no effect on the direction of Teledyne Technologies i.e., Teledyne Technologies and Mesa Laboratories go up and down completely randomly.

Pair Corralation between Teledyne Technologies and Mesa Laboratories

Considering the 90-day investment horizon Teledyne Technologies Incorporated is expected to generate 0.39 times more return on investment than Mesa Laboratories. However, Teledyne Technologies Incorporated is 2.57 times less risky than Mesa Laboratories. It trades about 0.14 of its potential returns per unit of risk. Mesa Laboratories is currently generating about -0.04 per unit of risk. If you would invest  43,280  in Teledyne Technologies Incorporated on August 30, 2024 and sell it today you would earn a total of  5,288  from holding Teledyne Technologies Incorporated or generate 12.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Teledyne Technologies Incorpor  vs.  Mesa Laboratories

 Performance 
       Timeline  
Teledyne Technologies 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Teledyne Technologies Incorporated are ranked lower than 10 (%) 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 December 2024.
Mesa Laboratories 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mesa Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Teledyne Technologies and Mesa Laboratories Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Teledyne Technologies and Mesa Laboratories

The main advantage of trading using opposite Teledyne Technologies and Mesa Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teledyne Technologies position performs unexpectedly, Mesa Laboratories 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 Mesa Laboratories will offset losses from the drop in Mesa Laboratories' long position.
The idea behind Teledyne Technologies Incorporated and Mesa Laboratories 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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