Correlation Between Sono Tek and Vishay Precision
Can any of the company-specific risk be diversified away by investing in both Sono Tek 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 Sono Tek and Vishay Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sono Tek Corp and Vishay Precision Group, you can compare the effects of market volatilities on Sono Tek 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 Sono Tek with a short position of Vishay Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sono Tek and Vishay Precision.
Diversification Opportunities for Sono Tek and Vishay Precision
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sono and Vishay is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sono Tek Corp and Vishay Precision Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Precision and Sono Tek 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 Sono Tek Corp 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 Sono Tek i.e., Sono Tek and Vishay Precision go up and down completely randomly.
Pair Corralation between Sono Tek and Vishay Precision
Given the investment horizon of 90 days Sono Tek Corp is expected to under-perform the Vishay Precision. In addition to that, Sono Tek is 1.27 times more volatile than Vishay Precision Group. It trades about -0.19 of its total potential returns per unit of risk. Vishay Precision Group is currently generating about 0.02 per unit of volatility. If you would invest 2,325 in Vishay Precision Group on November 3, 2024 and sell it today you would earn a total of 13.50 from holding Vishay Precision Group or generate 0.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sono Tek Corp vs. Vishay Precision Group
Performance |
| Timeline |
| Sono Tek Corp |
| Vishay Precision |
Sono Tek and Vishay Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sono Tek and Vishay Precision
The main advantage of trading using opposite Sono Tek and Vishay Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sono Tek 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.| Sono Tek vs. Novanta | Sono Tek vs. ESCO Technologies | Sono Tek vs. Vontier Corp | Sono Tek vs. Sensata Technologies Holding |
| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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