Correlation Between Vishay Intertechnology and NRG Energy
Can any of the company-specific risk be diversified away by investing in both Vishay Intertechnology and NRG Energy 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 Vishay Intertechnology and NRG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vishay Intertechnology and NRG Energy, you can compare the effects of market volatilities on Vishay Intertechnology and NRG Energy 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 Vishay Intertechnology with a short position of NRG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vishay Intertechnology and NRG Energy.
Diversification Opportunities for Vishay Intertechnology and NRG Energy
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vishay and NRG is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Intertechnology and NRG Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRG Energy and Vishay Intertechnology 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 Vishay Intertechnology are associated (or correlated) with NRG Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRG Energy has no effect on the direction of Vishay Intertechnology i.e., Vishay Intertechnology and NRG Energy go up and down completely randomly.
Pair Corralation between Vishay Intertechnology and NRG Energy
Assuming the 90 days trading horizon Vishay Intertechnology is expected to under-perform the NRG Energy. But the stock apears to be less risky and, when comparing its historical volatility, Vishay Intertechnology is 1.05 times less risky than NRG Energy. The stock trades about -0.11 of its potential returns per unit of risk. The NRG Energy is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 9,392 in NRG Energy on October 28, 2024 and sell it today you would earn a total of 1,148 from holding NRG Energy or generate 12.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vishay Intertechnology vs. NRG Energy
Performance |
| Timeline |
| Vishay Intertechnology |
| NRG Energy |
Vishay Intertechnology and NRG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vishay Intertechnology and NRG Energy
The main advantage of trading using opposite Vishay Intertechnology and NRG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vishay Intertechnology position performs unexpectedly, NRG Energy 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 NRG Energy will offset losses from the drop in NRG Energy's long position.| Vishay Intertechnology vs. MOLSON RS BEVERAGE | Vishay Intertechnology vs. PURE FOODS TASMANIA | Vishay Intertechnology vs. Grupo Carso SAB | Vishay Intertechnology vs. THAI BEVERAGE |
| NRG Energy vs. PennantPark Investment | NRG Energy vs. Chuangs China Investments | NRG Energy vs. Scottish Mortgage Investment | NRG Energy vs. Guangdong Investment Limited |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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