Correlation Between Microvision and Teledyne Technologies

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

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

Diversification Opportunities for Microvision and Teledyne Technologies

-0.35

Correlation Coefficient

Microvision  Teledyne Technologies

Very good diversification

The 3 months correlation between Microvision and Teledyne is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Microvision and Teledyne Technologies Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teledyne Technologies and Microvision 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 Microvision 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 Microvision i.e., Microvision and Teledyne Technologies go up and down completely randomly.

Pair Corralation between Microvision and Teledyne Technologies

Given the investment horizon of 90 days Microvision is expected to under-perform the Teledyne Technologies. In addition to that, Microvision is 3.07 times more volatile than Teledyne Technologies Incorporated. It trades about -0.02 of its total potential returns per unit of risk. Teledyne Technologies Incorporated is currently generating about 0.13 per unit of volatility. If you would invest  43,047  in Teledyne Technologies Incorporated on September 5, 2024 and sell it today you would earn a total of  4,805  from holding Teledyne Technologies Incorporated or generate 11.16% return on investment over 90 days.

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

Microvision  vs.  Teledyne Technologies Incorpor

Microvision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Microvision has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Microvision is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Teledyne Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Teledyne Technologies Incorporated are ranked lower than 10 (%) 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 Microvision and Teledyne Technologies

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

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.