Correlation Between Teradyne and Cedar Realty

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

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

Diversification Opportunities for Teradyne and Cedar Realty

-0.36

Correlation Coefficient

Teradyne  Cedar Realty

Very good diversification

The 3 months correlation between Teradyne and Cedar is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Cedar Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cedar Realty Trust and Teradyne 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 Teradyne are associated (or correlated) with Cedar Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cedar Realty Trust has no effect on the direction of Teradyne i.e., Teradyne and Cedar Realty go up and down completely randomly.

Pair Corralation between Teradyne and Cedar Realty

Considering the 90-day investment horizon Teradyne is expected to generate 0.45 times more return on investment than Cedar Realty. However, Teradyne is 2.22 times less risky than Cedar Realty. It trades about 0.24 of its potential returns per unit of risk. Cedar Realty Trust is currently generating about -0.05 per unit of risk. If you would invest  11,956  in Teradyne on October 8, 2024 and sell it today you would earn a total of  1,104  from holding Teradyne or generate 9.23% return on investment over 90 days.

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

Teradyne  vs.  Cedar Realty Trust

Teradyne

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Teradyne are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Teradyne is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Cedar Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cedar Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cedar Realty is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Teradyne and Cedar Realty

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

The idea behind Teradyne and Cedar Realty Trust 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.