Correlation Between Teradyne and Cimpress

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

By analyzing existing cross correlation between Teradyne and Cimpress NV, you can compare the effects of market volatilities on Teradyne and Cimpress 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 Cimpress. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Cimpress.

Diversification Opportunities for Teradyne and Cimpress

-0.08

Correlation Coefficient

Teradyne  Cimpress

Good diversification

The 3 months correlation between Teradyne and Cimpress is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Cimpress NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cimpress NV 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 Cimpress. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cimpress NV has no effect on the direction of Teradyne i.e., Teradyne and Cimpress go up and down completely randomly.

Pair Corralation between Teradyne and Cimpress

Considering the 90-day investment horizon Teradyne is expected to generate 1.22 times more return on investment than Cimpress. However, Teradyne is 1.22 times more volatile than Cimpress NV. It trades about 0.24 of its potential returns per unit of risk. Cimpress NV is currently generating about -0.52 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.  Cimpress NV

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.

Cimpress NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cimpress NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Teradyne and Cimpress

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

The idea behind Teradyne and Cimpress NV 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.