Correlation Between Teledyne Technologies and Trimble

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

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

Diversification Opportunities for Teledyne Technologies and Trimble

0.64

Correlation Coefficient

Teledyne Technologies  Trimble

Poor diversification

The 3 months correlation between Teledyne and Trimble is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Teledyne Technologies Incorpor and Trimble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trimble and Teledyne Technologies 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 Teledyne Technologies Incorporated are associated (or correlated) with Trimble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trimble has no effect on the direction of Teledyne Technologies i.e., Teledyne Technologies and Trimble go up and down completely randomly.

Pair Corralation between Teledyne Technologies and Trimble

Assuming the 90 days horizon Teledyne Technologies Incorporated is expected to generate 0.89 times more return on investment than Trimble. However, Teledyne Technologies Incorporated is 1.12 times less risky than Trimble. It trades about 0.06 of its potential returns per unit of risk. Trimble is currently generating about -0.06 per unit of risk. If you would invest  44,490  in Teledyne Technologies Incorporated on December 30, 2024 and sell it today you would earn a total of  2,260  from holding Teledyne Technologies Incorporated or generate 5.08% return on investment over 90 days.

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

Teledyne Technologies Incorpor  vs.  Trimble

Teledyne Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Teledyne Technologies Incorporated are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Teledyne Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Trimble

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trimble has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Teledyne Technologies and Trimble

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

The idea behind Teledyne Technologies Incorporated and Trimble 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.