Correlation Between Visteon Corp and Lear
Can any of the company-specific risk be diversified away by investing in both Visteon Corp and Lear 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 Visteon Corp and Lear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visteon Corp and Lear Corporation, you can compare the effects of market volatilities on Visteon Corp and Lear 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 Visteon Corp with a short position of Lear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visteon Corp and Lear.
Diversification Opportunities for Visteon Corp and Lear
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visteon and Lear is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Visteon Corp and Lear Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lear and Visteon Corp 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 Visteon Corp are associated (or correlated) with Lear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lear has no effect on the direction of Visteon Corp i.e., Visteon Corp and Lear go up and down completely randomly.
Pair Corralation between Visteon Corp and Lear
Allowing for the 90-day total investment horizon Visteon Corp is expected to under-perform the Lear. In addition to that, Visteon Corp is 1.08 times more volatile than Lear Corporation. It trades about -0.02 of its total potential returns per unit of risk. Lear Corporation is currently generating about 0.07 per unit of volatility. If you would invest 9,432 in Lear Corporation on November 18, 2024 and sell it today you would earn a total of 205.00 from holding Lear Corporation or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visteon Corp vs. Lear Corp.
Performance |
| Timeline |
| Visteon Corp |
| Lear |
Visteon Corp and Lear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visteon Corp and Lear
The main advantage of trading using opposite Visteon Corp and Lear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visteon Corp position performs unexpectedly, Lear 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 Lear will offset losses from the drop in Lear's long position.| Visteon Corp vs. Gentex | Visteon Corp vs. Adient PLC | Visteon Corp vs. Autoliv | Visteon Corp vs. Fox Factory Holding |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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