Correlation Between LightPath Technologies and Vicor
Can any of the company-specific risk be diversified away by investing in both LightPath Technologies 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 LightPath Technologies and Vicor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LightPath Technologies and Vicor, you can compare the effects of market volatilities on LightPath Technologies 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 LightPath Technologies with a short position of Vicor. Check out your portfolio center. Please also check ongoing floating volatility patterns of LightPath Technologies and Vicor.
Diversification Opportunities for LightPath Technologies and Vicor
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LightPath and Vicor is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding LightPath Technologies and Vicor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicor and LightPath Technologies 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 LightPath Technologies 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 LightPath Technologies i.e., LightPath Technologies and Vicor go up and down completely randomly.
Pair Corralation between LightPath Technologies and Vicor
Given the investment horizon of 90 days LightPath Technologies is expected to generate 2.44 times less return on investment than Vicor. But when comparing it to its historical volatility, LightPath Technologies is 1.06 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LightPath Technologies vs. Vicor
Performance |
| Timeline |
| LightPath Technologies |
| Vicor |
LightPath Technologies and Vicor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LightPath Technologies and Vicor
The main advantage of trading using opposite LightPath Technologies and Vicor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LightPath Technologies 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.| LightPath Technologies vs. Methode Electronics | LightPath Technologies vs. OSI Systems | LightPath Technologies vs. Plexus Corp | LightPath Technologies vs. CTS Corporation |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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