Correlation Between Western Acquisition and Visteon Corp
Can any of the company-specific risk be diversified away by investing in both Western Acquisition and Visteon Corp 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 Western Acquisition and Visteon Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Acquisition Ventures and Visteon Corp, you can compare the effects of market volatilities on Western Acquisition and Visteon Corp 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 Western Acquisition with a short position of Visteon Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Acquisition and Visteon Corp.
Diversification Opportunities for Western Acquisition and Visteon Corp
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Visteon is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and Visteon Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visteon Corp and Western Acquisition 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 Western Acquisition Ventures are associated (or correlated) with Visteon Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visteon Corp has no effect on the direction of Western Acquisition i.e., Western Acquisition and Visteon Corp go up and down completely randomly.
Pair Corralation between Western Acquisition and Visteon Corp
Given the investment horizon of 90 days Western Acquisition Ventures is expected to generate 0.72 times more return on investment than Visteon Corp. However, Western Acquisition Ventures is 1.38 times less risky than Visteon Corp. It trades about 0.01 of its potential returns per unit of risk. Visteon Corp is currently generating about -0.04 per unit of risk. If you would invest 1,083 in Western Acquisition Ventures on September 4, 2024 and sell it today you would earn a total of 9.00 from holding Western Acquisition Ventures or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Acquisition Ventures vs. Visteon Corp
Performance |
| Timeline |
| Western Acquisition |
| Visteon Corp |
Western Acquisition and Visteon Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Acquisition and Visteon Corp
The main advantage of trading using opposite Western Acquisition and Visteon Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Acquisition position performs unexpectedly, Visteon Corp 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 Visteon Corp will offset losses from the drop in Visteon Corp's long position.The idea behind Western Acquisition Ventures and Visteon Corp 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.| Visteon Corp vs. Ford Motor | Visteon Corp vs. General Motors | Visteon Corp vs. Goodyear Tire Rubber | Visteon Corp vs. Li Auto |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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