Correlation Between Teledyne Technologies and Spectris Plc

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

Diversification Opportunities for Teledyne Technologies and Spectris Plc

0.73

Correlation Coefficient

Teledyne Technologies  Spectris Plc

Poor diversification

The 3 months correlation between Teledyne and Spectris is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Teledyne Technologies Incorpor and Spectris plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectris plc 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 Spectris Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectris plc has no effect on the direction of Teledyne Technologies i.e., Teledyne Technologies and Spectris Plc go up and down completely randomly.

Pair Corralation between Teledyne Technologies and Spectris Plc

Considering the 90-day investment horizon Teledyne Technologies Incorporated is expected to generate 0.41 times more return on investment than Spectris Plc. However, Teledyne Technologies Incorporated is 2.42 times less risky than Spectris Plc. It trades about 0.1 of its potential returns per unit of risk. Spectris plc 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 Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Teledyne Technologies Incorpor  vs.  Spectris plc

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.

Spectris plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Spectris plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking indicators, Spectris Plc is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Teledyne Technologies and Spectris Plc

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

The idea behind Teledyne Technologies Incorporated and Spectris plc 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.