Correlation Between Talanx AG and Teledyne Technologies

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

By analyzing existing cross correlation between Talanx AG and Teledyne Technologies Incorporated, you can compare the effects of market volatilities on Talanx AG and Teledyne Technologies 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 Talanx AG with a short position of Teledyne Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talanx AG and Teledyne Technologies.

Diversification Opportunities for Talanx AG and Teledyne Technologies

0.54

Correlation Coefficient

Talanx AG  Teledyne Technologies

Very weak diversification

The 3 months correlation between Talanx and Teledyne is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and Teledyne Technologies Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teledyne Technologies and Talanx AG 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 Talanx AG are associated (or correlated) with Teledyne Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teledyne Technologies has no effect on the direction of Talanx AG i.e., Talanx AG and Teledyne Technologies go up and down completely randomly.

Pair Corralation between Talanx AG and Teledyne Technologies

Assuming the 90 days horizon Talanx AG is expected to generate 0.95 times more return on investment than Teledyne Technologies. However, Talanx AG is 1.05 times less risky than Teledyne Technologies. It trades about 0.19 of its potential returns per unit of risk. Teledyne Technologies Incorporated is currently generating about 0.17 per unit of risk. If you would invest  7,140  in Talanx AG on October 26, 2024 and sell it today you would earn a total of  1,100  from holding Talanx AG or generate 15.41% return on investment over 90 days.

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

Talanx AG  vs.  Teledyne Technologies Incorpor

Talanx AG

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Talanx AG reported solid returns over the last few months and may actually be approaching a breakup point.

Teledyne Technologies

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Teledyne Technologies Incorporated are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Teledyne Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Talanx AG and Teledyne Technologies

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

The idea behind Talanx AG and Teledyne Technologies Incorporated 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.