Correlation Between TD Holdings and Materion

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

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

Diversification Opportunities for TD Holdings and Materion

-0.29

Correlation Coefficient

TD Holdings  Materion

Very good diversification

The 3 months correlation between GLG and Materion is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding TD Holdings and Materion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materion and TD Holdings 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 TD Holdings are associated (or correlated) with Materion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materion has no effect on the direction of TD Holdings i.e., TD Holdings and Materion go up and down completely randomly.

Pair Corralation between TD Holdings and Materion

If you would invest  10,619  in Materion on September 3, 2024 and sell it today you would earn a total of  1,177  from holding Materion or generate 11.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

TD Holdings  vs.  Materion

TD Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TD Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, TD Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Materion

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Materion are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Materion may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TD Holdings and Materion

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

The idea behind TD Holdings and Materion 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.