Correlation Between British American and Vishay Intertechnology
Can any of the company-specific risk be diversified away by investing in both British American and Vishay Intertechnology 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 British American and Vishay Intertechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and Vishay Intertechnology, you can compare the effects of market volatilities on British American and Vishay Intertechnology 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 British American with a short position of Vishay Intertechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Vishay Intertechnology.
Diversification Opportunities for British American and Vishay Intertechnology
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between British and Vishay is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Vishay Intertechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Intertechnology and British American 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 British American Tobacco are associated (or correlated) with Vishay Intertechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Intertechnology has no effect on the direction of British American i.e., British American and Vishay Intertechnology go up and down completely randomly.
Pair Corralation between British American and Vishay Intertechnology
Assuming the 90 days trading horizon British American is expected to generate 26.89 times less return on investment than Vishay Intertechnology. But when comparing it to its historical volatility, British American Tobacco is 3.92 times less risky than Vishay Intertechnology. It trades about 0.01 of its potential returns per unit of risk. Vishay Intertechnology is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,513 in Vishay Intertechnology on October 25, 2024 and sell it today you would earn a total of 129.00 from holding Vishay Intertechnology or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Vishay Intertechnology
Performance |
| Timeline |
| British American Tobacco |
| Vishay Intertechnology |
British American and Vishay Intertechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Vishay Intertechnology
The main advantage of trading using opposite British American and Vishay Intertechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, Vishay Intertechnology 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 Vishay Intertechnology will offset losses from the drop in Vishay Intertechnology's long position.| British American vs. FIREWEED METALS P | British American vs. CARDINAL HEALTH | British American vs. GREENX METALS LTD | British American vs. Cardinal Health |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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