Correlation Between Acorn Energy and Teledyne Technologies

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

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

Diversification Opportunities for Acorn Energy and Teledyne Technologies

-0.21

Correlation Coefficient

Acorn Energy  Teledyne Technologies

Very good diversification

The 3 months correlation between Acorn and Teledyne is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Acorn Energy and Teledyne Technologies Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teledyne Technologies and Acorn Energy 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 Acorn Energy 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 Acorn Energy i.e., Acorn Energy and Teledyne Technologies go up and down completely randomly.

Pair Corralation between Acorn Energy and Teledyne Technologies

Given the investment horizon of 90 days Acorn Energy is expected to generate 5.44 times more return on investment than Teledyne Technologies. However, Acorn Energy is 5.44 times more volatile than Teledyne Technologies Incorporated. It trades about 0.02 of its potential returns per unit of risk. Teledyne Technologies Incorporated is currently generating about 0.04 per unit of risk. If you would invest  33.00  in Acorn Energy on September 13, 2024 and sell it today you would lose (4.00) from holding Acorn Energy or give up 12.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	29.29%
Values	Daily Returns

Acorn Energy  vs.  Teledyne Technologies Incorpor

Acorn Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acorn Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Acorn Energy is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Teledyne Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Teledyne Technologies Incorporated are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Teledyne Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Acorn Energy and Teledyne Technologies

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

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.