Correlation Between Visteon Corp and Lotus Technology
Can any of the company-specific risk be diversified away by investing in both Visteon Corp and Lotus Technology 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 Lotus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visteon Corp and Lotus Technology American, you can compare the effects of market volatilities on Visteon Corp and Lotus Technology 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 Lotus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visteon Corp and Lotus Technology.
Diversification Opportunities for Visteon Corp and Lotus Technology
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visteon and Lotus is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Visteon Corp and Lotus Technology American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Technology American 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 Lotus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Technology American has no effect on the direction of Visteon Corp i.e., Visteon Corp and Lotus Technology go up and down completely randomly.
Pair Corralation between Visteon Corp and Lotus Technology
Allowing for the 90-day total investment horizon Visteon Corp is expected to generate 0.88 times more return on investment than Lotus Technology. However, Visteon Corp is 1.14 times less risky than Lotus Technology. It trades about -0.08 of its potential returns per unit of risk. Lotus Technology American is currently generating about -0.11 per unit of risk. If you would invest 9,605 in Visteon Corp on August 30, 2024 and sell it today you would lose (398.00) from holding Visteon Corp or give up 4.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visteon Corp vs. Lotus Technology American
Performance |
| Timeline |
| Visteon Corp |
| Lotus Technology American |
Visteon Corp and Lotus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visteon Corp and Lotus Technology
The main advantage of trading using opposite Visteon Corp and Lotus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visteon Corp position performs unexpectedly, Lotus Technology 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 Lotus Technology will offset losses from the drop in Lotus Technology's long position.| Visteon Corp vs. Gentex | Visteon Corp vs. Adient PLC | Visteon Corp vs. Autoliv | Visteon Corp vs. Fox Factory Holding |
| Lotus Technology vs. Evolution Gaming Group | Lotus Technology vs. Playstudios | Lotus Technology vs. GameStop Corp | Lotus Technology vs. Senmiao Technology |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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