Correlation Between Teradyne and Sunrun

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

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

Diversification Opportunities for Teradyne and Sunrun

-0.26

Correlation Coefficient

Teradyne  Sunrun

Very good diversification

The 3 months correlation between Teradyne and Sunrun is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Sunrun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunrun Inc and Teradyne 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 Teradyne are associated (or correlated) with Sunrun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunrun Inc has no effect on the direction of Teradyne i.e., Teradyne and Sunrun go up and down completely randomly.

Pair Corralation between Teradyne and Sunrun

Considering the 90-day investment horizon Teradyne is expected to generate 0.66 times more return on investment than Sunrun. However, Teradyne is 1.51 times less risky than Sunrun. It trades about 0.08 of its potential returns per unit of risk. Sunrun Inc is currently generating about -0.15 per unit of risk. If you would invest  11,295  in Teradyne on January 31, 2024 and sell it today you would earn a total of  534.00  from holding Teradyne or generate 4.73% return on investment over 90 days.

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

Teradyne  vs.  Sunrun Inc

Teradyne

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Teradyne are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Teradyne reported solid returns over the last few months and may actually be approaching a breakup point.

Sunrun Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunrun Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Teradyne and Sunrun

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

The idea behind Teradyne and Sunrun Inc 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.