Correlation Between SIMON and Teradyne

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

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

Diversification Opportunities for SIMON and Teradyne

0.44

Correlation Coefficient

SIMON  Teradyne

Very weak diversification

The 3 months correlation between SIMON and Teradyne is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding SIMON PPTY GROUP and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne and SIMON 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 SIMON PPTY GROUP are associated (or correlated) with Teradyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradyne has no effect on the direction of SIMON i.e., SIMON and Teradyne go up and down completely randomly.

Pair Corralation between SIMON and Teradyne

Assuming the 90 days trading horizon SIMON PPTY GROUP is expected to under-perform the Teradyne. But the bond apears to be less risky and, when comparing its historical volatility, SIMON PPTY GROUP is 2.9 times less risky than Teradyne. The bond trades about -0.12 of its potential returns per unit of risk. The Teradyne is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  12,784  in Teradyne on September 15, 2024 and sell it today you would lose (462.00) from holding Teradyne or give up 3.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	73.44%
Values	Daily Returns

SIMON PPTY GROUP  vs.  Teradyne

SIMON PPTY GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMON PPTY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for SIMON PPTY GROUP investors.

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.

Pair Trading with SIMON and Teradyne

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

The idea behind SIMON PPTY GROUP and Teradyne 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.