Correlation Between Teradyne and Vodka Brands

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

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

Diversification Opportunities for Teradyne and Vodka Brands

0.27

Correlation Coefficient

Teradyne  Vodka Brands

Modest diversification

The 3 months correlation between Teradyne and Vodka is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Vodka Brands Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodka Brands Corp 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 Vodka Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodka Brands Corp has no effect on the direction of Teradyne i.e., Teradyne and Vodka Brands go up and down completely randomly.

Pair Corralation between Teradyne and Vodka Brands

Considering the 90-day investment horizon Teradyne is expected to generate 2.44 times less return on investment than Vodka Brands. But when comparing it to its historical volatility, Teradyne is 1.64 times less risky than Vodka Brands. It trades about 0.08 of its potential returns per unit of risk. Vodka Brands Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  94.00  in Vodka Brands Corp on October 22, 2024 and sell it today you would earn a total of  27.00  from holding Vodka Brands Corp or generate 28.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Teradyne  vs.  Vodka Brands Corp

Teradyne

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Teradyne are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Teradyne may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Vodka Brands Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vodka Brands Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward-looking signals, Vodka Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Teradyne and Vodka Brands

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

The idea behind Teradyne and Vodka Brands Corp 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.