Correlation Between Novanta and Vishay Precision
Can any of the company-specific risk be diversified away by investing in both Novanta and Vishay Precision 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 Novanta and Vishay Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novanta and Vishay Precision Group, you can compare the effects of market volatilities on Novanta and Vishay Precision 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 Novanta with a short position of Vishay Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novanta and Vishay Precision.
Diversification Opportunities for Novanta and Vishay Precision
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Novanta and Vishay is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Novanta and Vishay Precision Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Precision and Novanta 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 Novanta are associated (or correlated) with Vishay Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Precision has no effect on the direction of Novanta i.e., Novanta and Vishay Precision go up and down completely randomly.
Pair Corralation between Novanta and Vishay Precision
Given the investment horizon of 90 days Novanta is expected to generate 1.11 times more return on investment than Vishay Precision. However, Novanta is 1.11 times more volatile than Vishay Precision Group. It trades about 0.02 of its potential returns per unit of risk. Vishay Precision Group is currently generating about -0.05 per unit of risk. If you would invest 14,906 in Novanta on August 27, 2024 and sell it today you would earn a total of 2,073 from holding Novanta or generate 13.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novanta vs. Vishay Precision Group
Performance |
| Timeline |
| Novanta |
| Vishay Precision |
Novanta and Vishay Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novanta and Vishay Precision
The main advantage of trading using opposite Novanta and Vishay Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novanta position performs unexpectedly, Vishay Precision 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 Precision will offset losses from the drop in Vishay Precision's long position.| Novanta vs. Mesa Laboratories | Novanta vs. Itron Inc | Novanta vs. Fortive Corp | Novanta vs. Vishay Precision Group |
| Vishay Precision vs. Spectris plc | Vishay Precision vs. Mesa Laboratories | Vishay Precision vs. ESCO Technologies | Vishay Precision vs. Focus Universal |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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