Correlation Between Teradata Corp and Mercantile Investment

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

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

Diversification Opportunities for Teradata Corp and Mercantile Investment

0.65

Correlation Coefficient

Teradata Corp  Mercantile Investment

Poor diversification

The 3 months correlation between Teradata and Mercantile is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Teradata Corp and The Mercantile Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Mercantile Investment and Teradata Corp 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 Teradata Corp are associated (or correlated) with Mercantile Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Mercantile Investment has no effect on the direction of Teradata Corp i.e., Teradata Corp and Mercantile Investment go up and down completely randomly.

Pair Corralation between Teradata Corp and Mercantile Investment

Assuming the 90 days trading horizon Teradata Corp is expected to generate 2.4 times less return on investment than Mercantile Investment. In addition to that, Teradata Corp is 1.97 times more volatile than The Mercantile Investment. It trades about 0.04 of its total potential returns per unit of risk. The Mercantile Investment is currently generating about 0.18 per unit of volatility. If you would invest  23,208  in The Mercantile Investment on April 25, 2025 and sell it today you would earn a total of  2,192  from holding The Mercantile Investment or generate 9.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.16%
Values	Daily Returns

Teradata Corp  vs.  The Mercantile Investment

Teradata Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Teradata Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Teradata Corp is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

The Mercantile Investment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Mercantile Investment are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Mercantile Investment may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Teradata Corp and Mercantile Investment

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

The idea behind Teradata Corp and The Mercantile Investment 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.