Correlation Between Fabrinet and Vishay Intertechnology
Can any of the company-specific risk be diversified away by investing in both Fabrinet 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 Fabrinet and Vishay Intertechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fabrinet and Vishay Intertechnology, you can compare the effects of market volatilities on Fabrinet 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 Fabrinet with a short position of Vishay Intertechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fabrinet and Vishay Intertechnology.
Diversification Opportunities for Fabrinet and Vishay Intertechnology
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fabrinet and Vishay is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Fabrinet and Vishay Intertechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Intertechnology and Fabrinet 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 Fabrinet 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 Fabrinet i.e., Fabrinet and Vishay Intertechnology go up and down completely randomly.
Pair Corralation between Fabrinet and Vishay Intertechnology
Allowing for the 90-day total investment horizon Fabrinet is expected to generate 1.58 times more return on investment than Vishay Intertechnology. However, Fabrinet is 1.58 times more volatile than Vishay Intertechnology. It trades about 0.06 of its potential returns per unit of risk. Vishay Intertechnology is currently generating about -0.04 per unit of risk. If you would invest 18,883 in Fabrinet on September 3, 2024 and sell it today you would earn a total of 4,575 from holding Fabrinet or generate 24.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fabrinet vs. Vishay Intertechnology
Performance |
| Timeline |
| Fabrinet |
| Vishay Intertechnology |
Fabrinet and Vishay Intertechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fabrinet and Vishay Intertechnology
The main advantage of trading using opposite Fabrinet and Vishay Intertechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabrinet 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.The idea behind Fabrinet and Vishay Intertechnology 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.| Vishay Intertechnology vs. Silicon Motion Technology | Vishay Intertechnology vs. ASE Industrial Holding | Vishay Intertechnology vs. SemiLEDS | Vishay Intertechnology vs. Advanced Micro Devices |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |