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
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Novanta and Vishay is 0.01. 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 under-perform the Vishay Precision. But the stock apears to be less risky and, when comparing its historical volatility, Novanta is 1.7 times less risky than Vishay Precision. The stock trades about -0.05 of its potential returns per unit of risk. The Vishay Precision Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,325 in Vishay Precision Group on November 2, 2024 and sell it today you would earn a total of 24.00 from holding Vishay Precision Group or generate 1.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| 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.The idea behind Novanta and Vishay Precision Group 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 Precision vs. ESCO Technologies | Vishay Precision vs. Genasys | Vishay Precision vs. Know Labs | Vishay Precision vs. Mesa Laboratories |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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