Correlation Between Magna International and Vishay Intertechnology
Can any of the company-specific risk be diversified away by investing in both Magna International 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 Magna International and Vishay Intertechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Vishay Intertechnology, you can compare the effects of market volatilities on Magna International 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 Magna International with a short position of Vishay Intertechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Vishay Intertechnology.
Diversification Opportunities for Magna International and Vishay Intertechnology
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Magna and Vishay is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Vishay Intertechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Intertechnology and Magna International 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 Magna International 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 Magna International i.e., Magna International and Vishay Intertechnology go up and down completely randomly.
Pair Corralation between Magna International and Vishay Intertechnology
Considering the 90-day investment horizon Magna International is expected to under-perform the Vishay Intertechnology. In addition to that, Magna International is 1.02 times more volatile than Vishay Intertechnology. It trades about -0.01 of its total potential returns per unit of risk. Vishay Intertechnology is currently generating about -0.01 per unit of volatility. If you would invest 2,081 in Vishay Intertechnology on September 20, 2024 and sell it today you would lose (343.00) from holding Vishay Intertechnology or give up 16.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magna International vs. Vishay Intertechnology
Performance |
| Timeline |
| Magna International |
| Vishay Intertechnology |
Magna International and Vishay Intertechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Vishay Intertechnology
The main advantage of trading using opposite Magna International and Vishay Intertechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International 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.| Magna International vs. Ford Motor | Magna International vs. General Motors | Magna International vs. Goodyear Tire Rubber | Magna International vs. Li Auto |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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