Correlation Between Vishay Precision and FARO Technologies
Can any of the company-specific risk be diversified away by investing in both Vishay Precision and FARO Technologies 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 Precision and FARO Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vishay Precision Group and FARO Technologies, you can compare the effects of market volatilities on Vishay Precision and FARO Technologies 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 Precision with a short position of FARO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vishay Precision and FARO Technologies.
Diversification Opportunities for Vishay Precision and FARO Technologies
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vishay and FARO is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Precision Group and FARO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARO Technologies and Vishay Precision 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 Precision Group are associated (or correlated) with FARO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARO Technologies has no effect on the direction of Vishay Precision i.e., Vishay Precision and FARO Technologies go up and down completely randomly.
Pair Corralation between Vishay Precision and FARO Technologies
Considering the 90-day investment horizon Vishay Precision Group is expected to under-perform the FARO Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Vishay Precision Group is 1.95 times less risky than FARO Technologies. The stock trades about -0.05 of its potential returns per unit of risk. The FARO Technologies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,222 in FARO Technologies on August 27, 2024 and sell it today you would lose (522.00) from holding FARO Technologies or give up 16.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vishay Precision Group vs. FARO Technologies
Performance |
| Timeline |
| Vishay Precision |
| FARO Technologies |
Vishay Precision and FARO Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vishay Precision and FARO Technologies
The main advantage of trading using opposite Vishay Precision and FARO Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vishay Precision position performs unexpectedly, FARO Technologies 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 FARO Technologies will offset losses from the drop in FARO Technologies' long position.| Vishay Precision vs. Spectris plc | Vishay Precision vs. Mesa Laboratories | Vishay Precision vs. ESCO Technologies | Vishay Precision vs. Focus Universal |
| FARO Technologies vs. ESCO Technologies | FARO Technologies vs. Genasys | FARO Technologies vs. Cepton Inc | FARO Technologies vs. Darkpulse |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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