Correlation Between Vishay Intertechnology and Aptiv PLC

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Can any of the company-specific risk be diversified away by investing in both Vishay Intertechnology and Aptiv PLC 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 Aptiv PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vishay Intertechnology and Aptiv PLC, you can compare the effects of market volatilities on Vishay Intertechnology and Aptiv PLC 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 Aptiv PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vishay Intertechnology and Aptiv PLC.

Diversification Opportunities for Vishay Intertechnology and Aptiv PLC

0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Vishay and Aptiv is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Intertechnology and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv PLC 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 Aptiv PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptiv PLC has no effect on the direction of Vishay Intertechnology i.e., Vishay Intertechnology and Aptiv PLC go up and down completely randomly.

Pair Corralation between Vishay Intertechnology and Aptiv PLC

Considering the 90-day investment horizon Vishay Intertechnology is expected to generate 1.73 times more return on investment than Aptiv PLC. However, Vishay Intertechnology is 1.73 times more volatile than Aptiv PLC. It trades about 0.24 of its potential returns per unit of risk. Aptiv PLC is currently generating about 0.25 per unit of risk. If you would invest  1,515  in Vishay Intertechnology on September 20, 2024 and sell it today you would earn a total of  223.00  from holding Vishay Intertechnology or generate 14.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Vishay Intertechnology  vs.  Aptiv PLC

 Performance 
       Timeline  
Vishay Intertechnology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Vishay Intertechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Vishay Intertechnology is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.
Aptiv PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Aptiv PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Vishay Intertechnology and Aptiv PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vishay Intertechnology and Aptiv PLC

The main advantage of trading using opposite Vishay Intertechnology and Aptiv PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vishay Intertechnology position performs unexpectedly, Aptiv PLC 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 Aptiv PLC will offset losses from the drop in Aptiv PLC's long position.
The idea behind Vishay Intertechnology and Aptiv PLC 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.
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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