Correlation Between Teledyne Technologies and Spectris Plc

Can any of the company-specific risk be diversified away by investing in both Teledyne Technologies and Spectris Plc 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 Spectris Plc 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 Spectris plc, you can compare the effects of market volatilities on Teledyne Technologies and Spectris Plc 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 Spectris Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teledyne Technologies and Spectris Plc.

Diversification Opportunities for Teledyne Technologies and Spectris Plc

0.76

Correlation Coefficient

Teledyne Technologies  Spectris Plc

Poor diversification

The 3 months correlation between Teledyne and Spectris is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Teledyne Technologies Incorpor and Spectris plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectris plc 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 Spectris Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectris plc has no effect on the direction of Teledyne Technologies i.e., Teledyne Technologies and Spectris Plc go up and down completely randomly.

Pair Corralation between Teledyne Technologies and Spectris Plc

Considering the 90-day investment horizon Teledyne Technologies is expected to generate 5.44 times less return on investment than Spectris Plc. But when comparing it to its historical volatility, Teledyne Technologies Incorporated is 7.69 times less risky than Spectris Plc. It trades about 0.26 of its potential returns per unit of risk. Spectris plc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,626  in Spectris plc on May 6, 2025 and sell it today you would earn a total of  2,629  from holding Spectris plc or generate 100.11% 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.  Spectris plc

Teledyne Technologies

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Teledyne Technologies Incorporated are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Teledyne Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Spectris plc

Risk-Adjusted Performance

Good

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

Pair Trading with Teledyne Technologies and Spectris Plc

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

The idea behind Teledyne Technologies Incorporated and Spectris plc 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.