Correlation Between Teradyne and Maxeon Solar

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

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

Diversification Opportunities for Teradyne and Maxeon Solar

-0.47

Correlation Coefficient

Teradyne  Maxeon Solar

Very good diversification

The 3 months correlation between Teradyne and Maxeon is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Maxeon Solar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxeon Solar Technologies 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 Maxeon Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxeon Solar Technologies has no effect on the direction of Teradyne i.e., Teradyne and Maxeon Solar go up and down completely randomly.

Pair Corralation between Teradyne and Maxeon Solar

Considering the 90-day investment horizon Teradyne is expected to generate 0.25 times more return on investment than Maxeon Solar. However, Teradyne is 4.08 times less risky than Maxeon Solar. It trades about 0.04 of its potential returns per unit of risk. Maxeon Solar Technologies is currently generating about -0.08 per unit of risk. If you would invest  10,014  in Teradyne on September 26, 2024 and sell it today you would earn a total of  2,833  from holding Teradyne or generate 28.29% return on investment over 90 days.

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

Teradyne  vs.  Maxeon Solar Technologies

Teradyne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teradyne has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Maxeon Solar Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Maxeon Solar Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Maxeon Solar displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Teradyne and Maxeon Solar

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

The idea behind Teradyne and Maxeon Solar Technologies 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.