Correlation Between Amphenol and Vicor
Can any of the company-specific risk be diversified away by investing in both Amphenol and Vicor 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 Amphenol and Vicor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amphenol and Vicor, you can compare the effects of market volatilities on Amphenol and Vicor 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 Amphenol with a short position of Vicor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amphenol and Vicor.
Diversification Opportunities for Amphenol and Vicor
Very poor diversification
The 3 months correlation between Amphenol and Vicor is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Amphenol and Vicor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicor and Amphenol 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 Amphenol are associated (or correlated) with Vicor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicor has no effect on the direction of Amphenol i.e., Amphenol and Vicor go up and down completely randomly.
Pair Corralation between Amphenol and Vicor
Considering the 90-day investment horizon Amphenol is expected to generate 4.31 times less return on investment than Vicor. But when comparing it to its historical volatility, Amphenol is 1.73 times less risky than Vicor. It trades about 0.05 of its potential returns per unit of risk. Vicor is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,494 in Vicor on August 24, 2024 and sell it today you would earn a total of 1,929 from holding Vicor or generate 55.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amphenol vs. Vicor
Performance |
| Timeline |
| Amphenol |
| Vicor |
Amphenol and Vicor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amphenol and Vicor
The main advantage of trading using opposite Amphenol and Vicor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amphenol position performs unexpectedly, Vicor 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 Vicor will offset losses from the drop in Vicor's long position.The idea behind Amphenol and Vicor 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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