Correlation Between Vicor and Sanmina
Can any of the company-specific risk be diversified away by investing in both Vicor and Sanmina 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 Vicor and Sanmina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vicor and Sanmina, you can compare the effects of market volatilities on Vicor and Sanmina 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 Vicor with a short position of Sanmina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vicor and Sanmina.
Diversification Opportunities for Vicor and Sanmina
Very poor diversification
The 3 months correlation between Vicor and Sanmina is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Vicor and Sanmina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanmina and Vicor 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 Vicor are associated (or correlated) with Sanmina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanmina has no effect on the direction of Vicor i.e., Vicor and Sanmina go up and down completely randomly.
Pair Corralation between Vicor and Sanmina
Given the investment horizon of 90 days Vicor is expected to generate 1.27 times more return on investment than Sanmina. However, Vicor is 1.27 times more volatile than Sanmina. It trades about 0.07 of its potential returns per unit of risk. Sanmina is currently generating about 0.08 per unit of risk. If you would invest 3,657 in Vicor on August 26, 2024 and sell it today you would earn a total of 1,873 from holding Vicor or generate 51.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vicor vs. Sanmina
Performance |
| Timeline |
| Vicor |
| Sanmina |
Vicor and Sanmina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vicor and Sanmina
The main advantage of trading using opposite Vicor and Sanmina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vicor position performs unexpectedly, Sanmina 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 Sanmina will offset losses from the drop in Sanmina's long position.The idea behind Vicor and Sanmina 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.| Sanmina vs. Benchmark Electronics | Sanmina vs. Methode Electronics | Sanmina vs. OSI Systems | Sanmina vs. Celestica |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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