Correlation Between Teledyne Technologies and Teradyne

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

Diversification Opportunities for Teledyne Technologies and Teradyne

0.53

Correlation Coefficient

Teledyne Technologies  Teradyne

Very weak diversification

The 3 months correlation between Teledyne and Teradyne is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Teledyne Technologies Incorpor and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne 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 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 Teledyne Technologies i.e., Teledyne Technologies and Teradyne go up and down completely randomly.

Pair Corralation between Teledyne Technologies and Teradyne

Considering the 90-day investment horizon Teledyne Technologies Incorporated is expected to generate 0.4 times more return on investment than Teradyne. However, Teledyne Technologies Incorporated is 2.5 times less risky than Teradyne. It trades about 0.05 of its potential returns per unit of risk. Teradyne is currently generating about 0.01 per unit of risk. If you would invest  51,000  in Teledyne Technologies Incorporated on May 7, 2025 and sell it today you would earn a total of  4,226  from holding Teledyne Technologies Incorporated or generate 8.29% return on investment over 90 days.

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

Teledyne Technologies Incorpor  vs.  Teradyne

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 19 (%) 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.

Teradyne

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Teradyne are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Teradyne reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Teledyne Technologies and Teradyne

The main advantage of trading using opposite Teledyne Technologies and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teledyne Technologies 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 Teledyne Technologies Incorporated 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.

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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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.